First Data Merchant Services Corp. v. SecurityMetrics, Inc. ( 2016 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 15-2301
FIRST DATA MERCHANT SERVICES CORPORATION, a Florida
corporation; FIRST DATA CORPORATION,
Plaintiffs – Appellees,
v.
SECURITYMETRICS, INC., a Utah corporation,
Defendant – Appellant.
No. 15-2364
FIRST DATA MERCHANT SERVICES CORPORATION, a Florida
corporation; FIRST DATA CORPORATION,
Plaintiffs – Appellants,
v.
SECURITYMETRICS, INC., a Utah corporation,
Defendant - Appellee.
Appeals from the United States District Court for the District
of Maryland, at Baltimore. Richard D. Bennett, District Judge.
(1:12-cv-02568-RDB)
Argued: October 25, 2016 Decided: December 1, 2016
Before SHEDD, DUNCAN, and FLOYD, Circuit Judges.
Affirmed by unpublished opinion. Judge Duncan wrote the
opinion, in which Judge Shedd and Judge Floyd joined.
ARGUED: Lannie Rex Sears, MASCHOFF BRENNAN LAYCOCK GILMORE
ISRAELSEN & WRIGHT PLLC, Salt Lake City, Utah, for
Appellant/Cross-Appellee. Michael Lee Eidel, FOX ROTHSCHILD
LLP, Philadelphia, Pennsylvania, for Appellees/Cross-Appellants.
ON BRIEF: Sterling A. Brennan, MASCHOFF BRENNAN LAYCOCK GILMORE
ISRAELSEN & WRIGHT PLLC, Salt Lake City, Utah; J. Stephen Simms,
SIMMS SHOWERS, LLP, Baltimore, Maryland, for Appellant/Cross-
Appellee. Joshua Horn, Clair E. Wischusen, FOX ROTHSCHILD LLP,
Philadelphia, Pennsylvania; Charles N. Curlett, Jr., LEVIN &
CURLETT LLC, Baltimore, Maryland, for Appellees/Cross-
Appellants.
Unpublished opinions are not binding precedent in this circuit.
2
DUNCAN, Circuit Judge:
First Data Merchant Services Corporation and First Data
Corporation (collectively, “First Data”) and SecurityMetrics,
Inc. (“SecurityMetrics”), business partners turned adversaries,
bring this appeal and cross-appeal challenging two orders of the
district court. Throughout this protracted litigation, the
parties have asserted numerous claims against each other, but
only four are at issue here. SecurityMetrics appeals three
counterclaims on which the district court granted First Data
summary judgment on December 30, 2014 (the “December Order”).
First Data cross-appeals the district court’s denial of
attorneys’ fees in an order dated September 22, 2015 (the
“September Order”). For the reasons discussed below, we affirm
both orders.
I.
A.
First Data and SecurityMetrics are both companies in the
Payment Card Industry (“PCI”). The PCI includes three types of
primary service providers. Issuers supply payment cards to
consumers and collect amounts due; acquirers clear and settle
payment card transactions on behalf of merchants; and processors
facilitate the communication and settlement of payment. Some
PCI providers outsource certain functions to third-party
3
vendors. First Data performs both acquirer and processor
functions. SecurityMetrics is a third-party vendor.
The PCI Security Standards Council, an independent body
created by the five major payment card brands, 1 issues a set of
security standards, called the PCI Data Security Standard (“PCI
Standard” or “PCI DSS”) to help protect against credit card
theft and fraud. The PCI Standard is universal but the payment
card brands each have different requirements for demonstrating
or validating compliance with the standard. Level 4 merchants--
the category at issue here--have the lowest individual
transaction volume and are required to submit annual self-
assessment questionnaires to demonstrate compliance.
Any merchant that accepts credit payments must adhere to
the PCI Standard. Acquirers, like First Data, must ensure that
their merchants comply with the PCI Standard and can impose
noncompliance penalties and fees on merchants. Acquirers often
rely on third-party vendors, such as SecurityMetrics, to
validate their merchants’ compliance.
B.
From 2008 until 2012 the parties worked together pursuant
to a series of contracts. Under the terms of the agreements,
First Data listed SecurityMetrics as its preferred data
1 American Express, Discover, JCB, MasterCard, and Visa.
4
compliance vendor in all communications with First Data’s
Level 4 merchants. First Data charged merchants a PCI
compliance fee and then paid SecurityMetrics for its compliance
services on behalf of the merchants. SecurityMetrics provided
First Data with a weekly data feed and access to
SecurityMetrics’s system so that First Data could track the
compliance status of its merchants.
This arrangement continued without issue until First Data
decided to offer its own compliance service in 2012. 2 In
preparation for the launch of its service, First Data ordered
SecurityMetrics to cease communication with its Level 4
merchants effective June 1, 2012. In response, SecurityMetrics
alleged First Data had breached their contract and stopped
sending its weekly data feed.
C.
In May 2012, First Data filed suit against SecurityMetrics
in the United States District Court for the District of Utah
(the “Utah litigation”) alleging breach of contract and other
tortious conduct. The parties settled the Utah litigation
pursuant to a document titled “Terms of Settlement.” Under the
2
During the course of this litigation, First Data wound
down its proprietary compliance service and began to use a
different third-party PCI compliance vendor, Trustwave.
Trustwave became First Data’s preferred PCI compliance vendor.
5
Terms of Settlement, the parties agreed to a few basic
provisions that were to be memorialized in a confidential final
settlement agreement that would include “mutual non-
disparagement provisions.” J.A. 217. First Data agreed to pay
SecurityMetrics $5,000,000 and dismiss the Utah litigation with
prejudice, and SecurityMetrics was granted the “use of Merchant
Data for the purpose of selling its products and services.” Id.
A final settlement agreement never materialized. Less than
three months after signing the Terms of Settlement, First Data
filed the underlying action against SecurityMetrics in the
United States District Court for the District of Maryland.
First Data alleged nine counts of post-settlement misconduct
against SecurityMetrics. 3 SecurityMetrics answered and asserted
fifteen counterclaims. 4 The parties filed cross-motions for
3
First Data asserted the following counts: (1) Declaratory
relief as to the definition of Merchant Data; (2) Breach of
Contract of the Terms of Settlement; (3) Common Law Unfair
Competition; (4) Tortious Interference with Existing and
Prospective Contractual and Business Relationships;
(5) Injurious Falsehoods; (6) False Endorsement/Association,
Lanham Act, 15 U.S.C. § 1125(a)(1)(A); (7) Trademark/Service
Mark/Trade Name Infringement, Lanham Act, 15 U.S.C. §§ 1114(1),
1125(a)(1)(A); (8) False Advertising, Lanham Act, 15 U.S.C.
§ 1125(a)(1)(B); and (9) Declaratory Relief as to PCI compliance
reporting data.
4
SecurityMetrics alleged First Data had, through its
advertisements and communications with merchants, disparaged
SecurityMetrics and brought the following counterclaims:
(1) Specific Performance of the provision in the Terms of
Settlement to execute a final settlement agreement;
(Continued)
6
summary judgment, and the district court held a hearing on the
motions and issued the December Order. In the December Order,
the district court denied SecurityMetrics’s motion for summary
judgment but granted First Data’s motion for summary judgment as
to Counts 4 through 15 of SecurityMetrics’s counterclaims.
The district court scheduled a trial as to the remaining
claims. On the eve of trial, the parties narrowed the claims
down to the sole issue of the meaning of the term “Merchant
Data” in the Terms of Settlement. Following a two-day bench
trial, the district court ruled in favor of SecurityMetrics.
After the trial, First Data filed a motion for attorneys’
fees in relation to SecurityMetrics’s Utah Truth in Advertising
Act (“UTIAA”) claim (Count 8) on which the district court had
granted First Data summary judgment in the December Order. The
UTIAA provides that “[t]he court shall award attorneys’ fees to
the prevailing party” in a UTIAA action. Utah Code § 13-11a-
(2) Declaratory Judgment with respect to the Merchant Data
provision of the Terms of Settlement; (3) Declaratory Judgment
with respect to the confidentiality clause of the Terms of
Settlement; (4) Injurious Falsehoods; (5) Federal False
Advertising; (6) Federal False Endorsement; (7) Cancellation of
Registration; (8) Utah Deceptive Trade Practices violations;
(9) Tortious Interference with Business Relations; (10) Federal
Restraint of Trade; (11) Federal Monopolization and Attempted
Monopolization; (12) Maryland Restraint of Trade; (13) Maryland
Monopolization and Attempted Monopolization; (14) Maryland
Predatory Pricing; (15) Anticompetitive pricing arrangements in
violation of Md. Code Com. Law § 11-204(a)(6).
7
4(2)(c). The district court denied this motion in the September
Order finding that, although First Data did prevail as to the
UTIAA claim itself, it was not a “prevailing party” at trial and
with respect to the litigation as a whole.
D.
On appeal, the parties do not contest the district court’s
ruling at trial as to the meaning of the term Merchant Data.
Rather, the claims at issue before us originate from the
pretrial December Order. SecurityMetrics appeals three of its
counterclaims that the district court dismissed.
First, SecurityMetrics alleges First Data’s advertisements
violated the Lanham Act. Certain First Data promotional
materials stated its merchants would have to pay First Data’s
compliance fee regardless of whether the merchant also used a
third-party compliance vendor. SecurityMetrics claims this is a
false statement because First Data actually provided refunds to
merchants who used third-party compliance vendors. Finding the
statements were literally true, the district court granted First
Data summary judgment on this claim.
Second, SecurityMetrics contends First Data tortiously
interfered with its business relations by making disparaging
comments to merchants about SecurityMetrics. The district court
also granted First Data summary judgment as to this claim
8
because it found that SecurityMetrics had not offered any
admissible evidence to establish causation.
Third, SecurityMetrics challenges the district court’s
ruling as to its antitrust claims. SecurityMetrics alleged that
First Data violated several antitrust laws when it launched its
own competing PCI compliance service. The district court found
that, because SecurityMetrics had not demonstrated injury to
competition, rather than simply injury to itself, it lacked
standing to pursue those claims. The court therefore granted
First Data summary judgment as to these claims.
First Data cross-appeals the district court’s denial of
attorneys’ fees as to SecurityMetrics’s failed UTIAA claim. We
first consider SecurityMetrics’s claims in turn and then
evaluate First Data’s cross-appeal. For the reasons that
follow, we affirm the district court’s rulings on both parties’
claims.
II.
Summary judgment is appropriate when “there is no genuine
dispute as to any material fact.” Fed. R. Civ. P. 56(a). We
review the district court’s grant of summary judgment de novo,
viewing the facts and drawing all reasonable inferences in the
light most favorable to the nonmovant. Askew v. HRFC, LLC, 810
F.3d 263, 266 (4th Cir. 2016). In doing so, “it is ultimately
9
the nonmovant’s burden to persuade us that there is indeed a
dispute of material fact. It must provide more than a scintilla
of evidence--and not merely conclusory allegations or
speculation--upon which a jury could properly find in its
favor.” CorTel Va., LLC v. Verizon Va., LLC, 752 F.3d 364, 370
(4th Cir. 2014) (citation omitted). Regardless of the standard
imposed by the burden of persuasion, the nonmovant may not
defeat a motion for summary judgment “without offering any
concrete evidence from which a reasonable juror could return a
verdict in his favor [nor] by merely asserting the jury might,
and legally could,” disbelieve the movant. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 256 (1986).
III.
A.
We first consider whether the district court erred in
granting summary judgment to First Data on its false advertising
claim. We conclude it did not.
To bring a false advertising claim under the Lanham Act, a
plaintiff must establish that (1) the defendant made a false or
misleading description of fact or representation of fact in a
commercial advertisement about his own or another's product that
(2) is material and (3) actually deceives or has the tendency to
deceive a substantial segment of its audience (4) after being
10
placed in interstate commerce, (5) causing the plaintiff injury.
PBM Prods., LLC v. Mead Johnson & Co., 639 F.3d 111, 120 (4th
Cir. 2011).
Only the first element--whether First Data’s advertisements
were false or misleading--is at issue here. A plaintiff can
establish the first element by showing an advertisement is
either (a) literally false or (b) literally true but likely to
mislead or confuse consumers. C.B. Fleet Co. v. SmithKline
Beecham Consumer Healthcare, L.P., 131 F.3d 430, 434 (4th Cir.
1997). SecurityMetrics proceeds on the first theory.
“In analyzing whether an advertisement . . . is literally
false, a court must determine, first, the unambiguous claims
made by the advertisement . . . and, second, whether those
claims are false.” PBM Prods., 639 F.3d at 120 (quoting Scotts
Co. v. United Indus. Corp., 315 F.3d 264, 274 (4th Cir. 2002)).
“A literally false message may be either explicit or conveyed by
necessary implication when, considering the advertisement in its
entirety, the audience would recognize the claim as readily as
if it had been explicitly stated.” Id. (quoting Scotts Co., 315
F.3d at 274). A false-by-necessary-implication claim must fail
if the advertisement “can reasonably be understood as conveying
different messages.” Scotts Co., 315 F.3d at 275. “Only an
unambiguous message can be literally false.” Id. at 275–76
(quoting Novartis Consumer Health, Inc. v. Johnson & Johnson-
11
Merck Consumer Pharm. Co., 290 F.3d 578, 587 (3d Cir. 2002)
(emphasis in original)).
The challenged First Data advertisements state:
If you choose to use a third-party vendor for PCI
DSS compliance services, you will need to contract
with and pay that vendor directly. In addition to
your alternate vendor’s charges for PCI DSS compliance
services, you still will need to pay the Compliance
Service Fee charged to you by your merchant services
provider. The Compliance Service Fee is not affected
by your choice to use a third-party vendor.
* * *
If First Data’s PCI compliance services are
contractually available to you, you will be charged an
applicable annual compliance fee for those services,
regardless of whether you use them or utilize the
services of some other third-party PCI compliance
services vendor. If you utilize the additional
services of a third party vendor, you will pay that
third party vendor’s charges for those fees in
addition to First Data’s annual compliance fee.
J.A. 799–800 (emphasis added). According to SecurityMetrics,
these advertisements are literally false because First Data
refunded some merchants that paid both the First Data PCI
compliance fee and a third-party vendor. Because the
advertisements can, in context, be read more than one way,
however, we reject SecurityMetrics’s argument.
It is undisputed that First Data has always charged its
merchants a PCI compliance fee. When the parties worked
together under their contract, First Data would pay
SecurityMetrics from the PCI compliance fee charged to the
12
merchants. Once SecurityMetrics was no longer a preferred
vendor, as the advertisements state, First Data still required
its merchants to pay its PCI Compliance fee. If the merchant
used First Data’s PCI compliance services, the merchant would
not pay anything additional. If, however, a merchant wished to
use a third-party compliance vendor--such as SecurityMetrics--
the merchant would have to pay that fee directly to the third
party. Hence, a merchant would pay for compliance services
twice. SecurityMetrics contends that, though this was First
Data’s official policy, in practice First Data would refund a
merchant that complained about being double charged in the
amount of the SecurityMetrics fee. Therefore, SecurityMetrics
argues, the advertisement necessarily implies a literal
falsehood. The district court disagreed and found these
statements were “only problematic due to what was left unsaid--
that a refund might be available.” J.A. 1369. We agree. 5
5 SecurityMetrics also objects that, on the motion for
summary judgment, the district court “without warning or other
intervening change in circumstances” changed course from an
earlier position. Appellant’s Br. at 15. When First Data moved
to dismiss the false advertising claim, the district court found
that the claim was “articulable as an affirmative misstatement--
i.e., that merchants will pay for the service but that some do
not because of the refund.” J.A. 229–30. SecurityMetrics
alleges the district court erred in subsequently dismissing the
claim. Of course this argument ignores the fundamental
difference between attacking a claim on a motion to dismiss and
at the summary judgment stage. In a motion to dismiss, the
court must accept the factual allegations in the plaintiff’s
(Continued)
13
First Data’s advertisements are not unambiguous and
therefore cannot be literally false. On one reading of the
advertisement, the service fee is affected because First Data
would, if asked, refund customers an amount equal to the third-
party vendor charge. Merchants who asked for and received a
refund did not pay the third-party fee in addition to the PCI
compliance fee. However, by another reading, because First
Data’s refund policy was discretionary and not automatic, the
advertisement is true on its face. Put another way, if a
SecurityMetrics customer never asked First Data for a refund, it
would, as the advertisement states, pay a third-party vendor fee
“in addition to” First Data’s PCI Compliance fee. J.A. 799. A
claim that is “implicit, attenuated, or merely suggestive
usually cannot fairly be characterized as literally false.”
Design Res., Inc. v. Leather Indus. of Am., 789 F.3d 495, 502
(4th Cir. 2015) (quoting Clorox Co. P.R. v. Proctor & Gamble
Commercial Co., 228 F.3d 24, 35 (1st Cir. 2000)).
SecurityMetrics “asks us to reach entirely outside the face of
complaint as true. Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 555 (2007). However, a plaintiff has a higher burden when
faced with a motion for summary judgment. At that stage of
litigation, the party opposing summary judgment “must set forth
specific facts showing that there is a genuine issue for trial.”
Liberty Lobby, 477 U.S. at 256 (internal citation omitted).
SecurityMetrics failed to carry its burden.
14
the ad and into the context surrounding the ad’s publication to
uncover a false message it argues is necessarily implied,” Id.
at 503, but the false-by-necessary-implication doctrine does not
stretch that far. Therefore, the district court properly
granted First Data summary judgment on that issue. 6
B.
SecurityMetrics next argues that the district court erred
in granting First Data summary judgment as to the tortious
interference claim. Under Maryland law, tortious interference
with economic relations requires a claimant to show
“(1) intentional and willful acts; (2) calculated to cause
damage to the plaintiffs in their lawful business; (3) done with
the unlawful purpose to cause such damage and loss, without
right or justifiable cause on the part of the defendants (which
constitutes malice); and (4) actual damage and loss resulting.”
Alexander & Alexander Inc. v. B. Dixon Evander & Assocs., Inc.,
650 A.2d 260, 269 (Md. 1994) (quoting Willner v. Silverman, 71
A. 962, 964 (Md. 1909)). Because SecurityMetrics failed to
establish causation, the district court granted First Data
6SecurityMetrics also argues that a jury must decide
whether the statements were literally false. That is incorrect.
Although literal falsity is a question of fact, C.B. Fleet Co.,
131 F.3d at 436, whether a nonmovant has put forth sufficient
evidence to establish a genuine dispute as to that fact is a
legal question for the district court’s determination. See
Design Res., 789 F.3d at 502.
15
summary judgment on the tortious interference claim. We affirm
for the same reason.
SecurityMetrics alleged First Data used the Utah litigation
as “a weapon . . . for the . . . purpose of interfering with
SecurityMetrics’s actual and prospective economic relations.”
J.A. 194. According to SecurityMetrics, it lost 280,000
existing customers as well as potential new customers because of
this alleged misconduct. SecurityMetrics sought to introduce
two forms of evidence to show causation: (1) transcripts of
phone calls and emails from customers stating why they were
canceling or not renewing their contracts with SecurityMetrics
and (2) an expert report prepared by Clarke Nelson (the “Nelson
report”). The district court excluded both pieces of evidence.
The viability of SecurityMetrics’s argument depends on
whether the district court properly refused to admit the
customer calls and emails and the Nelson report. We review the
district court’s rulings on the admissibility of evidence for
abuse of discretion and will only reverse if the ruling was
arbitrary and irrational. Minter v. Wells Fargo Bank, N.A., 762
F.3d 339, 349 (4th Cir. 2014). We find no abuse of discretion
here.
16
1.
First, the district court did not err in excluding the
customer communications as inadmissible hearsay.
SecurityMetrics asserts the calls and emails should have been
admitted either because they are verbal acts, and therefore not
hearsay, or under the state of mind exception to the hearsay
rule.
Under the Federal Rules of Evidence, verbal acts--those
declarations where “the statement itself affects the legal
rights of the parties or is a circumstance bearing on conduct
affecting their rights”--are not hearsay. Fed. R. Evid. 801
advisory committee’s note to subdivision (c). “[P]roof of oral
utterances by the parties in a contract suit constituting the
offer and acceptance which brought the contract into being are
not evidence of assertions offered testimonially but rather
verbal conduct to which the law attaches duties and
liabilities.” 2 McCormick on Evidence § 249 (7th ed.) (2016)
(emphasis added).
Although portions of the calls and emails--references to
contract terminations and account closure instructions--might
constitute verbal acts, these admissible sections are not
evidence of the causation element necessary to support
SecurityMetrics’s tortious interference claim. What
SecurityMetrics wants to use from the calls--comments made by
17
customers regarding First Data’s conduct--are not verbal acts.
In other words, the existence of the contract is a verbal act
but irrelevant to causation; the portions that would go to
causation--why the merchants decided not to renew or sign a
contract--are relevant but inadmissible.
Nor can the calls and recordings be admitted under the
state of mind exception to hearsay. That exception excludes
from hearsay “[a] statement of the declarant’s then-existing
state of mind . . . but not including a statement of memory or
belief to prove the fact remembered or believed unless it
relates to the validity or terms of the declarant’s will.” Fed.
R. Evid. 803(3). SecurityMetrics attempts to avail itself of
this exception by stating that the calls and emails are offered
only to prove “what customers believed and why they did what
they did.” Appellant’s Br. at 52. However, unless the
statements are also offered for the truth of the matter
asserted--that the merchants canceled their contracts with
SecurityMetrics because of First Data’s misconduct--these
customer statements do not show causation.
Put simply, to escape a hearsay exclusion, SecurityMetrics
could only offer the evidence for purposes irrelevant to
demonstrating causation. The relevant evidence is inadmissible
hearsay. Therefore, the district court did not abuse its
18
discretion in determining that no admissible portion of the
calls and emails satisfied the element of causation.
2.
SecurityMetrics’s argument as to the Nelson report is also
unavailing. On appeal, SecurityMetrics faults the district
court for not considering its expert’s report as evidence of
causation. However, SecurityMetrics retained Mr. Nelson as an
expert to opine on the amount of damages, not causation. In
Mr. Nelson’s deposition in connection with First Data’s motion
in limine to exclude the report, he stated he did not “intend to
give an opinion on causation . . . from a legal standpoint,”
but he did “intend to express opinions that” a “correlation”
existed between First Data’s “alleged bad acts and harm that was
suffered.” J.A. 1027–28. Upon further questioning, Mr. Nelson
reiterated that he was not going to offer an opinion at trial as
to whether “the alleged bad acts by First Data caused any
damage.” J.A. 1903. Therefore, the district court did not
abuse its discretion by disregarding the Nelson report since it
was not offered to prove any opinion on causation.
C.
Next, we turn to SecurityMetrics’s antitrust counts.
SecurityMetrics asserted six antitrust counterclaims against
19
First Data under federal and Maryland law. 7 To proceed on any of
its claims, SecurityMetrics must first establish antitrust
standing, which requires some cognizable antitrust injury.
Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489
(1977). “Because the antitrust laws are intended to protect
competition, and not simply competitors, only injury caused by
damage to the competitive process may form the basis of an
antitrust claim.” Thompson Everett, Inc. v. Nat’l Cable Adv.,
L.P., 57 F.3d 1317, 1325 (4th Cir. 1995). SecurityMetrics
alleged antitrust injury in the form of reduced output and
frustrated price competition. The district court correctly
rejected those claims because SecurityMetrics failed to support
either theory with sufficient evidence to survive a motion for
summary judgment.
As an initial matter, we note SecurityMetrics did not
properly plead its antitrust claims because it did not allege
any antitrust injury before the summary judgment stage.
Generally, a party may not raise new arguments after discovery
without amending its complaint. U.S. ex rel. Owens v. First
Kuwaiti Gen. Trading & Contracting Co., 612 F.3d 724, 731 (4th
Cir. 2010). SecurityMetrics argues that it did not need to
7 Federal antitrust analysis also applies to
SecurityMetrics’s state law claims. See Md. Code § 11-
202(a)(2).
20
plead which theory it would rely upon. Even assuming that is
correct, SecurityMetrics was required to allege some antitrust
injury, which its complaint did not.
Even if SecurityMetrics did properly plead its antitrust
claims, they nonetheless fail. SecurityMetrics’s evidence for
its antitrust claims consisted of a wholly undeveloped claim
that it lost 280,000 customers in two years, 70,000 of which
went to First Data. SecurityMetrics points to the remaining
unaccounted for 210,000 merchants as evidence of reduced output.
SecurityMetrics provides no evidence to support its speculation
that these “lost merchants” resulted from misconduct on the part
of First Data. Any number of reasons might similarly explain
the merchants’ departure, all of which are conjecture. 8 The
merchants could have migrated to a company other than First Data
or SecurityMetrics, gone out of business altogether, changed
their business mode, or no longer been in the market for a
number of other reasons unrelated to First Data’s alleged
conduct. SecurityMetrics’s “tenuous” inferences are simply not
enough to “fall within the range of reasonable probability” and
8SecurityMetrics claims only First Data had access to the
evidence related to the “lost merchants,” leaving
SecurityMetrics with the sole option of deposing 210,000 third
parties to show reduced output. This argument, of course,
overlooks the possibility that SecurityMetrics could have
retained an expert to opine on the issue of reduced output.
21
overcome a summary judgment challenge. Thompson Everett, 57
F.3d at 1323. The district court therefore properly rejected
reduced output as a plausible antitrust injury.
SecurityMetrics’s attempt to establish antitrust standing
based on harm to price competition fails for the same reason.
SecurityMetrics claims that although First Data’s prices are
higher than SecurityMetrics, First Data has gained customers
while SecurityMetrics has lost them. It is unclear what harm to
price competition this fact reflects. SecurityMetrics does not
allege predatory pricing, which is the only pricing practice
that “has the requisite anticompetitive effect.” Atlantic
Richfield Co. v. USA Petroleum Co., 495 U.S. 328, 340 (1990).
SecurityMetrics may have shown injury to its business but the
record lacks any evidence that First Data’s practices harmed the
“competitive process.” Thompson Everett, 57 F.3d at 1325. We
must therefore conclude that its antitrust claims fail.
IV.
Finally, we consider First Data’s sole issue on cross-
appeal: the district court’s denial of its attorneys’ fees as it
relates to SecurityMetrics’s UTIAA counterclaim. We review the
denial of attorneys’ fees for abuse of discretion. Reinbol v.
Evers, 187 F.3d 348, 362 (4th Cir. 1999). We apply Utah law to
determine whether an award of attorneys’ fees to First Data is
22
warranted. See Hitachi Credit Am. Corp. v. Signet Bank, 166
F.3d 614, 631 (4th Cir. 1999). “[W]e defer to the trial court’s
judgment, and reverse a trial court’s attorney fees
determination only if the trial court exceeds the bounds of its
discretion.” Neff v. Neff, 247 P.3d 380, 399 (Utah 2011).
SecurityMetrics brought a counterclaim under the UTIAA,
which was enacted “to prevent deceptive, misleading, and false
advertising practices and forms in Utah.” Utah Code § 13-11a-
1. The district court granted First Data summary judgment as to
this claim because “the relevant provisions of the [UTIAA] track
the Lanham Act [so] SecurityMetrics’ claims under the state
statute fail as well.” J.A. 1372. 9 Under the UTIAA, “[t]he
court shall award attorneys’ fees to the prevailing party.”
Utah Code § 13-11a-4(2)(c). Notwithstanding the statutory
language, the district court did not award First Data attorneys’
fees because it was not the prevailing party “within the context
of the case as a whole.” J.A. 1939. First Data argues the
district court’s decision was an error of law. We disagree.
The Supreme Court of Utah has not defined “prevailing
party” specifically as to the UTIAA, but it has provided a
general framework to ascertain the prevailing party in an
action.
9 SecurityMetrics did not appeal its UTIAA claim.
23
In Neff v. Neff, 247 P.3d 380 (Utah 2011), two brothers and
one-time business partners became embroiled in litigation
spanning more than six years. After trial, both parties sought
attorneys’ fees, which the trial court denied. Only one brother
appealed. The Supreme Court of Utah affirmed the denial and
held that a trial court “must base its decision [whether to
award attorney fees] on a number of factors.” Id. at 398.
These factors include the language of the contract or
statute that forms the basis of the attorney fees
award, the number of claims brought by the parties,
the importance of each of the claims relative to the
entire litigation, and the amounts awarded on each
claim. . . . Accordingly, it is possible that, in
litigation where both parties obtain mixed results,
neither party should be deemed to have prevailed for
purposes of awarding attorney fees. This is true even
where the statutory language states that a prevailing
party ‘shall be entitled to’ fees.
Id. at 398–99 (emphasis added) (footnotes omitted).
Here, the district court properly applied the rationale and
standard announced in Neff. Between the two parties, there were
twenty-four claims before the district court. The district
court granted First Data summary judgment as to eleven of the
claims. The parties voluntarily dismissed or withdrew eleven
other claims. 10 Though the district court granted First Data
10 After various pre-trial motions, First Data had four
remaining claims (Counts 1, 2, 4, and 9) and SecurityMetrics had
two remaining claims (Counts 2 and 3). The Friday before trial,
the parties reached a partial resolution to winnow the remaining
claims down to the meaning of Merchant Data under the Terms of
(Continued)
24
summary judgment on several claims, it “never ruled that the
conduct of which SecurityMetrics complained was not actionable,”
but rather that SecurityMetrics had not met its evidentiary
burdens. J.A. 1940. Out of the twenty-four counts, the sole
issue at trial was the parties’ competing claims as to the
meaning of Merchant Data.
Under Neff, the “prevailing party” does not refer to a
single count nor is it simply a matter of adding up which party
won the most claims. The district court here determined that,
while First Data did prevail as to the UTIAA claim, it “had only
limited success when the case is considered as a whole.”
J.A. 1938. The interpretation of Merchant Data was the only
issue at trial, an issue on which First Data suffered a
“resounding loss.” J.A. 1940. Considering the Neff factors,
the district court determined First Data’s UTIAA claim “occupied
a peripheral position in the litigation as a whole.” J.A. 1939.
The district court did not abuse its discretion in so finding.
First Data’s argument that the plain language of the UTIAA “does
not state prevailing party in the entire action” is plainly
Settlement (First Data Count 1 and SecurityMetrics Count 2).
The parties filed a consent order to dismiss with prejudice the
remaining claims (First Data Counts 2, 4, and 9 and
SecurityMetrics Count 3), each side bearing their own costs and
fees. The parties also withdrew their request for a jury trial.
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foreclosed by Neff’s holding that a district court must consider
“each of the claims relative to the entire litigation . . . even
where the statutory language states that a prevailing party
shall be entitled to fees.” Neff 247 P.3d at 398–99 (internal
citation omitted). Therefore, we affirm the district court’s
denial of attorneys’ fees.
V.
On the record before us, SecurityMetrics did not present
evidence of a genuine issue of material fact sufficient to
survive a motion for summary judgment on its Lanham Act claim,
tortious interference claim, or antitrust claims. The district
court did not abuse its discretion in finding that First Data
was not a prevailing party in the overall action and, therefore,
not entitled to attorneys’ fees under the UTIAA. For these
reasons, the judgment of the district court is
AFFIRMED.
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