In the ongoing tussle between Philadelphia personal injury firms Larry Pitt & Associates and Lundy Law, the former has responded to the latter’s motion to dismiss, arguing that the question of whether Lundy Law principal L. Leonard Lundy has monopolized a key advertising market for small plaintiffs firms is one that cannot be decided until discovery is completed.
The two firms have been in litigation for months, largely over Pitt’s allegations that Lundy has monopolized the market for advertising on the exteriors of city buses by entering into exclusive contracts with the Southeastern Pennsylvania Transportation Authority, aided by his daughter, an account executive at Titan, the advertising company that has the exclusive rights to sell advertisements on behalf of SEPTA.
The defendants contended in their motion that Pitt’s allegation that Lundy had monopolized the legal services market in the Greater Philadelphia region failed in part because its definition of that market was too narrow.
“Pitt never plausibly explains why ‘legal services provided by small personal injury and Social Security disability and workers’ compensation law firms’ should exist in a market separate and apart from the exact same services provided by solo practitioners, or large firms, or small firms that handle a greater variety of matters,” the defendants said.
But in a response filed Friday, Pitt pointed to the U.S. Supreme Court’s 1962 ruling in Brown Shoe v. United States, which held that submarkets may exist within a broader market and can themselves be considered product markets for antitrust purposes.
The defendants also argued that Pitt “does not and cannot allege that Lundy has tied up all (or even a substantial portion) of the countless advertising opportunities that exist in the proposed market.”
“There is simply no harm to competition when firms like Pitt retain hundreds or thousands of ways to reach their potential clients,” the defendants said.
But Pitt disputed this argument in its response.
“Is an ad in the Yellow Pages (which is often tossed on someone’s doorstep before it quickly makes its way to the recycling bin) really a functionally interchangeable substitute for exclusive ads on the exteriors of SEPTA buses, defined as one-of-a-kind moving billboards, and which run over 170 bus routes day and night throughout the Greater Philadelphia region?” Pitt asked in its response. “Similarly, do potential clients consider law firms like Dechert and DLA Piper reasonable substitutes for ‘small personal injury, Social Security disability and workers’ compensation law firms?’”
Pitt said in its response that these questions are too complex for the court to answer at such an early stage in the litigation.
Pitt’s first amended complaint was filed in August in the U.S. District Court for the Eastern District of Pennsylvania in response to the first motion to dismiss the defendants filed in June.
Pitt filed its original complaint May 2, two weeks after Lundy Law dropped its federal trademark suit against Pitt.
Pitt alleged in the original complaint that Lundy Law has entered into contracts that give the firm exclusive rights to advertise on the exteriors of SEPTA and Berks Area Regional Transportation Authority buses.
According to the complaint, these contracts have foreclosed Pitt & Associates from renewing its own contracts for exterior bus advertisements, which are considered to be among “the most effective forms of advertising for legal services for small personal injury, Social Security disability and workers’ compensation law firms to use in order to achieve name recognition.”
The August amended complaint added that, in March 2011, Lundy’s daughter began working as an account executive at Titan.
Before Lundy’s daughter joined Titan, several local personal injury firms, including Pitt, advertised on the exteriors of SEPTA buses, according to the amended complaint.
“Less than a year after L. Leonard Lundy’s daughter began working for Titan, an agreement was entered into among SEPTA, Titan and defendant Lundy, under which no legal service provider except defendant Lundy would be permitted to place any advertisements on the exteriors of buses,” the amended complaint alleged.
Since then, according to the amended complaint, Pitt and other Lundy Law competitors have been told either by Lundy’s daughter or another Titan representative that they could not purchase advertisements on the exteriors of SEPTA buses.
The amended complaint said Rand Spear, the founder and principal of Spear Greenfield, had advertised on the exteriors of SEPTA buses from about 2006 until October 2011, but was told in early 2012 and again in early 2013 that he could no longer purchase such advertisements, even if he paid a higher rate than Lundy.
Similarly, according to the amended complaint, Leonard K. Hill, managing partner of Hill & Associates, was allegedly told by Lundy’s daughter that he could not purchase exterior bus advertisements because of her father’s exclusive agreement with Titan and SEPTA.
The original complaint also alleged Pitt & Associates was unable to secure a contract with Comcast SportsNet to advertise during sporting events because Lundy Law’s contract precluded the company from entering into agreements with any other legal service provider for advertising during games for at least one year, with unlimited one-year renewal options.
According to the complaint, Pitt & Associates encountered similar roadblocks when it tried to secure contracts to advertise within the Wells Fargo Center and on KYW Newsradio during traffic and weather reports, traffic sponsorships and time checks.
The defendants did not directly address Pitt’s allegations regarding Lundy’s daughter in their September 12 motion to dismiss, except to say that “while Pitt has dressed up its allegations with inconsequential personal attacks, Pitt has failed to fix the fundamental problems Lundy previously identified.”
“As before, Pitt summarily accuses Lundy of outbidding Pitt for certain exclusive advertising opportunities in the Philadelphia area,” the defendants said. “The antitrust laws, however, are designed to protect the competitive process, not particular competitors.”
But Pitt, in its response filed Friday, called this argument “a misrepresentation” of the plaintiff’s position.
“As pled, there was no ‘bidding’ for the exclusive contracts that Lundy obtained,” Pitt said. “For example, the SEPTA exclusive contract was neither advertised nor were competitive bids solicited. Instead, as alleged by Pitt, Lundy paid well above competitive market rates (10 times what Pitt and others had previously paid), not only to put his advertisements on bus exteriors, but also to exclude any competitor from doing likewise, even if SEPTA had unused available space.”
Pitt said in a footnote that, under 74 Pa.C.S. §1750(a)(b), SEPTA contracts over $25,000 must be advertised at least two weeks prior to the bid opening and competitive bids must be secured.
“Discovery will show that Lundy’s November 10, 2011, exclusive contract with SEPTA, through its agent Titan, was for over $400,000 with the option to renew at the same price,” Pitt said in the footnote.
The defendants said in their motion to dismiss that Pitt’s allegations that Lundy’s exclusive contracts have hurt its business are not indicative of harm to the competitive process, but rather harm to Pitt.
“Indeed, Pitt appears to be using this lawsuit in an effort to avoid competition,” the defendants said.
But Pitt argued in its response that it has alleged harm to other firms as well.
“Of course, by the very nature of exclusive contracts, Pitt, Spear and Hill are only representative of all competing firms that are now excluded from advertising in the premier venues that Lundy has locked up through his exclusive contracts,” Pitt said.
Counsel for Pitt, Carl W. Hittinger of DLA Piper in Philadelphia, declined to comment beyond Friday’s filing.
Reached Friday afternoon, counsel for the defendants, Robert C. Heim of Dechert in Philadelphia, said he hadn’t yet read Pitt’s filing, but noted that he “just got off a very crowded Frankford Elevated train where there was a very large advertisement for Larry Pitt & Associates and no advertisement for Lundy Law.”