A month after Philadelphia personal injury firm Lundy Law shot back at competitor Larry Pitt & Associates’ second amended complaint by saying the Pitt firm has “stretched the facts as far as truth will allow—and beyond,” the Pitt firm has responded that it has sufficiently alleged antitrust claims and that the case must proceed to discovery.
On Feb. 12, Lundy Law and advertising firm Titan jointly filed a motion to dismiss the Pitt firm’s second amended complaint, saying the new complaint “largely repeats the same allegations that this court already found insufficient.”
“Enough is enough,” the defendants said in the motion. “Pitt has now had three opportunities to transform its factual allegations into actionable antitrust, unfair competition, and tortious interference claims, and clearly cannot do so.”
But ina March 12 memorandum in opposition to Lundy Law’s motion to dismiss, the Pitt firm said Lundy Law’s motion “consists largely of factual misstatements, disputes of fact and glaring omissions of what was truly pled, which only serves to underscore the need for discovery in this matter.”
The defendants, in their Feb. 12 filing, had called the Pitt firm’s allegation that Lundy Law principal L. Leonard Lundy’s contracts with Titan to exclusively advertise on the exterior of Southeastern Pennsylvania Transportation Authority buses allow the firm to pay the same price for advertising with SEPTA every year “utterly and demonstrably false.” SEPTA is Greater Philadelphia’s regional mass transit system.
“In fact, the documents establish that contract prices increased over time, and that nothing prevents Titan from raising prices further in the future,” the defendants said. “If Lundy tries to renew but does not accept Titan’s price, Titan is free to negotiate an exclusive with another advertiser or to refrain from offering an exclusive altogether.”
But in its March 12 filing, the Pitt firm said that assertion was “not only unbecoming, but wrong based on the documents thus far obtained from Titan that still exist.”
“As a corollary, that Lundy has resorted to interpreting and trying to characterize contractual terms in the limited context of a Rule 12(b)(6) motion to dismiss only serves to underscore the highly factual nature of the claims in this case, and the need for discovery to finally commence so that all pertinent facts may be brought to light,” Pitt said. “This would include why Lundy himself wrote ‘at the same price’ in the contract to which Titan agreed, despite his counsel’s argument to the contrary.”
The Pitt firm filed its second amended complaint Jan. 2 after U.S. District Judge Cynthia M. Rufe of the Eastern District of Pennsylvania issued a Dec. 13, 2013, opinion dismissing without prejudice the Pitt firm’s Sherman Act, unfair competition and tortious interference with contract claims, saying the plaintiff failed to show that Lundy Law’s exclusive advertising contracts with SEPTA, KYW, the Wells Fargo Center and the Berks Area Regional Transportation Authority were unlawful.
Rufe said the Pitt firm “alleged no facts, beyond Lundy Law’s acquisition of discrete, albeit highly effective, advertising opportunities, in support of its claim that Lundy Law has engaged in predatory or anti-competitive conduct.”
But in one of two accompanying orders, Rufe gave the Pitt firm until Jan. 3 to replead the dismissed antitrust claims, along with a claim that a federal trademark suit Lundy Law filed against the Pitt firm in early 2013 and then dropped constituted an abuse of process.
While the Pitt firm has maintained the Dragonetti Act claim Rufe allowed to proceed in her Dec. 13 decision, the firm has dropped its abuse of process claim.
In the second amended complaint, the Pitt firm raised new allegations that Lundy Law has engaged in a “horizontal conspiracy” in which it refers work to other law firms in exchange for their agreement not to advertise on SEPTA buses.
The new complaint also named Titan, the advertising company that has the exclusive rights to sell advertisements on behalf of SEPTA, as a defendant.
In its March 12 memorandum, the Pitt firm reiterated the second amended complaint’s allegations that Lundy Law has entered into an agreement with Philadelphia workers’ compensation firm Pond Lehocky Stern Giordano in which Pond Lehocky refrains from advertising on SEPTA vehicles.
In exchange, the second amended complaint alleged, Lundy Law falsely advertises itself as a Social Security disability and workers’ compensation firm and then refers much of the work it brings in from those advertisements to Pond Lehocky.
Pond Lehocky, meanwhile, allegedly pays Lundy Law a fee for these advertisements and referrals, according to the second amended complaint, which also alleged Lundy Law has similar agreements with other firms, but did not name them.
The defendants said in their Feb. 12 filing that the Pitt firm “fails to plausibly explain how, if at all, any such arrangement harmed competition in its proposed legal services market, or how Pitt was injured as a result.”
“According to the SAC, the ‘conspiracy’ involved an agreement by other law firms ‘not to advertise against Lundy on, at least, SEPTA buses,’” the defendants said in the filing. “Such conduct would benefit Pitt—a firm that has ‘historically’ advertised with SEPTA.”
Reached via email Jan. 3, Pond Lehocky principal Samuel H. Pond called the allegations “bizarre.”
“We decided not to advertise in the interior of mass transit since we didn’t feel it fit into our marketing strategy, not because Len Lundy was on the exterior of buses,” Pond said in the email. “The Lundy firm never was in our thoughts or discussions in making our decisions.”
Pond Lehocky has not been named as a defendant.
The Pitt firm said in its March 12 memorandum that these allegations supported its claims of monopolization, conspiracy to monopolize and attempted monopolization under Section 2 of the Sherman Act.
“Lundy need not have obtained actual monopoly power. Rather, Lundy need only have conspired with the intent to monopolize,” the Pitt firm said in its memorandum.
The Pitt firm also reiterated in its March 12 memorandum the second amended complaint’s allegation that Lundy Law has engaged in a scheme “since at least 2006″ in which it is paid by doctors and other health care providers for referrals, at a rate of up to $800 per patient.
While the defense had argued in its Feb. 12 filing that those allegations did not form an adequate basis for an antitrust suit, the Pitt firm said in its March 12 memorandum that the doctor referral payments are “strong evidence of [Lundy Law's] dominant market power.”
“If doctors did not view Lundy as the dominant player in the market, why would they risk their professional reputations and careers by engaging in illegal and unethical behavior?” the Pitt firm said in its March 12 memorandum.
The Pitt firm also maintained in its March 12 memorandum that its allegations that Lundy Law has entered into exclusive and anti-competitive advertising contracts with Titan on behalf of SEPTA, as well as with KYW, the Wells Fargo Center and BARTA, demonstrated that Lundy Law has “relegated competitors to advertising through only inferior outlets, which do not yield the same ‘bang for the buck.’”
The Pitt firm said in its March 12 memorandum that it has confirmed that “Titan is required to renew the exclusive contract at the end of each year at Lundy’s sole option, thus rendering it a de facto long-term contract of the type courts have long condemned.”
“Pitt and others have no chance to bid at the end of the term of the deal because Lundy can (and has) exercised his stated ‘exclusive option to renew’ each year in November, approximately three months before the contract expires,” the Pitt firm said.
Reached Friday, counsel for the Pitt firm, Carl W. Hittinger of DLA Piper in Philadelphia, said the March 12 motion “speaks for itself.”
Counsel for Lundy Law and Titan, Robert C. Heim of Dechert in Philadelphia, could not be reached for comment.