Cell towers are mostly owned and operated by tower
companies, which rent wireless carriers the right to locate equipment on their
towers. Most towers are on property
leased to tower companies. TriStar is a
tower company with about 650 tower locations (out of 135,000 in the US). Defendant ATC operates about 22,800 tower
sites. By mid-2013, TriStar had rights in land on which 594 cell towers
currently or formerly operated by ATC, for about $50 million, or $85,000 per
site. Its rights allow TriStar to operate cell towers on these sites when ATC’s
current leases expire, in return for giving landowners a share of operating
revenue; it’s already operating some of the towers. ATC reported an 82% gross profit margin in
2012, while TriStar reported a gross profit margin of 55%. ATC alleged that
TriStar’s agreements with two tower companies (SBA and Crown), in which TriStar
agreed not to seek property rights in the land under towers owned or controlled
by them, constituted an anticompetitive scheme to pay “supra-competitive”
prices for property rights at ATC tower sites, “thus raising ATC’s costs to
acquire future property rights, in the hopes that ATC would ultimately pay
TriStar for a similar standstill agreement.”
In response, ATC “began to be more proactive in seeking to
acquire property interests for itself at its tower sites in order to control
the use of the site after its current leases expired, and explored
opportunities to move its towers or relocate its tower tenants to neighboring
ATC towers.” TriStar alleged that the
results were false and misleading statements to landowners and sham litigation,
allegedly securing future control at 2,944 sites where TriStar had made offers
to landowners to acquire land rights under towers operated or formerly operated
by ATC.
Nobody’s antitrust claims succeeded, because nobody’s
antitrust claims do; the court found that ATC lacked standing to pursue a Sherman
Act Section 1 counterclaim against TriStar, and that there was no dangerous
probability of ATC successfully monopolizing the national market, given the
competition from TriStar, Crown, and SBA (now allies of a sort—yay duopoly!). ATC’s trade secret counterclaim based on its
price terms survived, though barely; the court was dubious that price terms
were actually trade secrets, but the parties didn’t submit enough evidence
either way. ATC’s tortious interference
counterclaims also survived. RICO claims
against TriStar-related individuals were dismissed.
The Lanham Act piece: ATC argued that any allegedly false
statements it made were in connection with efforts to get real property rights
(easements/leases/etc.) rather than goods or services. But ATC concededly provides services to
landowners and wireless carriers; the statements to landowners were
sufficiently connected to these services to support a Lanham Act claim.
Still, ATC argued that its statements were made to
suppliers—landowners supplying property—not purchasers, and thus couldn’t
prompt a change in purchasing behavior.
Here, however, landowners could properly be characterized as consumers
for these purposes. TriStar’s evidence
showed that ATC characterized landowners as its customers, for example in a
mailing to a landowner, describing a commitment to being a “quality service
provider for our customers and those companies and partners like you.” The court found Health Care Compare Corp. v.
United Payor & United Providers, Inc., No. 96–C–2518, 1998 WL 122900
(N.D.Ill. Mar. 13, 1998) persuasive. That case involved a middleman; the court
found that statements to healthcare providers were actionable even though they
were paid for services provided through the middleman’s network; the defendant’s
business couldn’t succeed unless both payors and providers were convinced to
use defendant’s services “with [defendant] providing each with access to the
other.”
“Accordingly, where an entity is not a traditional
‘purchaser,’ statements to that entity may still be actionable under the Lanham
Act if that entity is essential to the defendant’s ability to meet the needs of
the entities that purchase its goods or services.” Thus, the Lanham Act applied to ATC’s
statements to landowners because ATC required property rights from them to do
business with wireless carriers. “[T]he
importance of these property rights to ATC’s business relationship with
wireless carriers places ATC’s statements to landowners properly within the
bounds of a claim under the Lanham Act.”
Hmm. Not sure this is consistent
with Lexmark, but perhaps you can
think of the “service” of managing the property and passing on revenues to the
property owners as something that’s being advertised, and purchased with
property rights instead of dollars?
Also, there is arguably an even stronger 1-to-1 correspondence between sales made to one and sales lost to another than in Lexmark. Given the need/desire of competitors to use the same land, there does
seem to be a strong competitive interest at stake.
TriStar’s tortious interference claim likewise survived.
ATC argued that TriStar hadn’t submitted sufficient evidence
of damages. TriStar alleged that ATC made false statements about TriStar to
landowners to discourage them from conveying to TriStar. (E.g., an ATC representative described
TriStar’s method of operation as “highway robbery” and that the company was a
“dirty, rotten, stinking outfit,” and a landowner testified that ATC’s
statements left him “no options” but to stop “entertaining the thought of
anything else other than [ATC].”) TriStar claimed injury as to 278 of the 2944
sites where they competed; ATC argued that at most TriStar showed that it lost
property to ATC or paid more to secure a property interest because of ATC’s
actions at 28 sites. TriStar’s expert
claimed to extrapolate from those sites to the remaining 250; he observed that
as the number of incidents of misconduct by ATC increased, TriStar’s close rate
decreased, despite the fact that TriStar increased its marketing expenditures
and made allegedly superior offers. His
regression analysis was sufficient to survive summary judgment, allowing a jury
to conclude that TriStar was injured at 278 sites.
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