sports programming. ESPN sells its programming to operators
pursuant to license agreements, granting those operators the
right to retransmit that programming within a particular
geographic area. Plaintiff Telsat is an operator that markets
MMDS to subscribers in Indiana, and does not operate under a
local franchising authority. Instead, Telsat competes with
local cable operators, as well as with local broadcast
"The court's function on a Rule 12(b)(6) motion is not to
weigh the evidence that might be presented at a trial but
merely to determine whether the complaint itself is legally
sufficient." Festa v. Local 3 International Brotherhood of
Electrical Workers, 905 F.2d 35, 37 (2d Cir. 1990); see also
Ryder Energy Distribution Corp. v. Merrill Lynch Commodities,
Inc., 748 F.2d 774, 779 (2d Cir. 1984) ("The function of a
motion to dismiss `is merely to assess the legal feasibility of
the complaint, not to assay the weight of the evidence which
might be offered in support thereof.'" (quoting Geisler v.
Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980))).
Thus, a motion to dismiss must be denied "unless it appears
beyond a doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief."
Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40
L.Ed.2d 90 (1974) (citing Conley v. Gibson, 355 U.S. 41, 45-46,
78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957)); see also Morales v.
New York State Dep't of Corrections, 842 F.2d 27, 30 (2d Cir.
1988). In deciding a motion to dismiss, the Court must accept
the plaintiff's allegations of fact as true, together with such
reasonable inferences as may be drawn in his favor. Papasan v.
Allain, 478 U.S. 265, 283, 106 S.Ct. 2932, 2943, 92 L.Ed.2d 209
(1986); Murray v. Milford, 380 F.2d 468, 470 (2d Cir. 1967);
Hill v. Sullivan, 125 F.R.D. 86, 90 (S.D.N.Y. 1989) ("all
allegations in plaintiffs' amended complaint must be accepted
as true and liberally construed."); see also Scheuer, supra,
416 U.S. at 236, 94 S.Ct. at 1686. Federal Rule of Civil
Procedure 8(a) requires only a "`short and plain statement of
the claim' that will give the defendant fair notice of what
plaintiff's claim is and the ground upon which it rests."
Conley, supra, 355 U.S. at 47, 78 S.Ct. at 102 (quoting
Nevertheless, the complaint must set forth enough information
to suggest that relief would be based on some recognized legal
theory. Telectronics Proprietary, Ltd. v. Medtronic, Inc.,
687 F. Supp. 832, 836 (S.D.N.Y. 1988) (Leisure, J.). "The District
Court has no obligation to create, unaided by plaintiff, new
legal theories to support a complaint." District of Columbia v.
Air Florida, Inc., 750 F.2d 1077, 1081-82 (D.C. Cir. 1984). "In
practice `a complaint . . . must contain either direct or
inferential allegations respecting all the material elements
necessary to sustain a recovery under some viable legal
theory.'" Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101,
1106 (7th Cir. 1984) (quoting Sutliff, Inc. v. Donovan Cos.,
727 F.2d 648, 654 (7th Cir. 1984) (Posner, J.) (emphasis in
original) (quoting French Quarter Apartments Ltd. v.
Georgia-Pacific Corp., 655 F.2d 627, 641 (5th Cir. 1981), cert.
dism'd, 462 U.S. 1125, 103 S.Ct. 3100, 77 L.Ed.2d 1358
(1983))), cert. denied, 470 U.S. 1054, 105 S.Ct. 1758, 84
L.Ed.2d 821 (1985).
Having set forth the standards for evaluating motions under
Rule 12(b)(6), the Court now addresses the sufficiency of
First Claim: Monopolization of Market for Subscription
Telsat's first claim is brought under § 2 of the Sherman Act,
15 U.S.C. § 2,*fn3 alleging monopolization by ESPN of the
"market for subscription television programming services for
quality sports programming in the United States." Complaint
¶ 43. "The offense of monopolization under § 2 of the Sherman
Act consists of two elements: (1) the possession of monopoly
power in the relevant market; and (2) the willful acquisition
or maintenance of that power, as distinguished from growth or
development as a consequence of a superior product, business
acumen, or historic accident." Volvo North America Corp. v.
Men's International Professional Tennis Council, 857 F.2d 55,
73 (2d Cir. 1988) (citing Aspen Skiing Co. v. Aspen Highlands
Skiing Corp., 472 U.S. 585, 596 n. 19, 105 S.Ct. 2847, 2854 n.
19, 86 L.Ed.2d 467 (1985) (quoting United States v. Grinnell
Corp., 384 U.S. 563, 570-71, 86 S.Ct. 1698, 1703-04, 16 L.Ed.2d
778 (1966)); National Association of Pharmaceutical
Manufacturers v. Ayerst Laboratories, 850 F.2d 904, 915 (2d
Cir. 1988)); see also Delaware & Hudson Railway Co. v.
Consolidated Rail Corp., 902 F.2d 174, 178 (2d Cir. 1990).
Section 2 of the Sherman Act is "aimed . . . at the
acquisition or retention of effective market control."
United States v. Griffith, 334 U.S. 100, 107, 68 S.Ct. 941,
945, 92 L.Ed. 1236 (1948). It is designed to prevent "a
pernicious market structure in which the concentration of power
saps the salubrious influence of competition." Berkey Photo,
Inc. v. Eastman Kodak Co., 603 F.2d 263, 272 (2d Cir. 1979),
cert. denied, 444 U.S. 1093, 100 S.Ct. 1061, 62 L.Ed.2d 783
(1980). Ordinarily, the Court may infer the existence of
monopoly power from a predominant share of the relevant market.
United States v. Grinnell Corp., 384 U.S. 563, 571, 86 S.Ct.
1698, 1704, 16 L.Ed.2d 778 (1966). Here, Telsat has alleged in
its complaint that "ESPN, by far the largest sports programming
service abusively dominates the market." Complaint ¶ 13.
Although inartfully punctuated, this allegation, immediately
following an allegation that the relevant market "is the market
for subscription television programming services for quality
sports programming," Complaint ¶ 12, sufficiently avers a
predominant share of the relevant market to permit an inference
of monopoly power. Grinnell, supra, 384 U.S. at 571, 86 S.Ct.
at 1704; see also Telectronics, supra, 687 F. Supp. at 838.
The second element of a § 2 monopolization claim requires an
allegation that ESPN willfully engaged in anticompetitive
behavior in the relevant market. Volvo, supra, 857 F.2d at 73.
"The mere possession of monopoly power does not ipso facto
condemn a market participant. But, to avoid the proscriptions
of § 2, the firm must refrain from conduct directed at
smothering competition." Berkey, supra, 603 F.2d at 275. See
also Aspen Skiing, supra, 472 U.S. at 602, 105 S.Ct. at 2857
("there is agreement on the proposition that `no monopolist
monopolizes unconscious of what he is doing.'" (quoting United
States v. Aluminum Company of America, 148 F.2d 416, 432 (2d
Cir. 1945) (L. Hand, J.)); Northeastern Telephone Co. v.
American Telephone and Telegraph Co., 651 F.2d 76, 84-85 (2d
Cir. 1981) (citing Berkey, supra, 603 F.2d at 275), cert.
denied, 455 U.S. 943, 102 S.Ct. 1438, 71 L.Ed.2d 654 (1982).
Thus monopoly power is not unlawful per se, but rather becomes
illegal when the result of anticompetitive behavior in the
In paragraph 20 of the complaint, Telsat avers that "ESPN has
. . . (iv) induced and coerced various cable operators to enter
into contracts or otherwise agree to actions that allows
defendant ESPN to monopolize . . . and restrain trade
unreasonably in the market for subscription television
programming services in the United States." Complaint ¶ 20.
Although this allegation does not specify the particular cable
operators that ESPN has induced and coerced as part of its
alleged anticompetitive scheme, the Court cannot find that
Telsat has failed to meet the liberal pleading requirements of
Rule 8 with respect to its monopolization claim. Telsat has
adequately alleged monopoly power, as well as anticompetitive
conduct, on the part of ESPN. Volvo, supra, 857 F.2d at 73.
Hence, ESPN's motion to dismiss Telsat's first claim must be
Second Claim: Conspiracy to Monopolize
Telsat alleges in its second claim that ESPN's conduct with
cable operators constitutes a "combination or conspiracy to
monopolize the market for subscription television programming
services in the United States." Complaint ¶ 47. To prevail on
such a claim under § 2 of the Sherman Act, Telsat must allege
and prove "(1) concerted action, (2) overt acts in furtherance
of the conspiracy, and (3) specific intent to monopolize."
Volvo, supra, 857 F.2d at 74. "`It need not be shown that
monopoly power has been attained, nor that if the conspirators
continued in their course unmolested they would have attained
it, but only that obtaining such power is the purpose which
motivates the conspiracy.'" Telectronics, supra, 687 F. Supp. at
838 (quoting L. Sullivan, Antitrust, § 49, at 132-33 (1977)).
Telsat's only allegations of concerted action state that
"ESPN has combined or conspired with certain cable system
operators to monopolize the market for subscription television
programming services by coercing and inducing the cable
operators, inter alia, (i) to refuse to agree to offer ESPN to
Telsat (ii) to discriminate against and disadvantage Telsat in
promotion and marketing its services." Complaint ¶ 48.
"Although the Federal Rules permit statement of ultimate facts,
a bare bones statement of conspiracy or of injury under the
antitrust laws without any supporting facts permits dismissal."
Heart Disease Research Foundation v. General Motors Corp.,
463 F.2d 98, 100 (2d Cir. 1972); see also Garshman v. Universal
Resources Holding Inc., 824 F.2d 223, 230 (3d Cir. 1987) ("The
allegation of unspecified contracts with unnamed other entities
to achieve unidentified anticompetitive effects does not meet
the minimum standards for pleading a conspiracy in violation of
the Sherman Act."); Telectronics, supra, 687 F. Supp. at 838-39
(dismissing § 2 conspiracy claim for failure to name alleged
co-conspirators). Telsat's allegations thus fall well short of
the information required by law to plead concerted action as
part of a § 2 conspiracy claim, and therefore ESPN's motion to
dismiss that claim is granted.*fn4
Third Claim: Attempted Monopolization
Telsat's third claim alleges that ESPN's conduct "constitutes
an attempt to monopolize the subscription television
programming services market in the United States" in violation
of § 2 of the Sherman Act. Complaint ¶ 51. Such a claim
requires proof of three elements: "(1) anticompetitive or
exclusionary conduct; (2) specific intent to monopolize; and
(3) a dangerous probability that the attempt will succeed."
Volvo, supra, 857 F.2d at 73-74; see also Ayerst, supra, 850
F.2d at 915.
As the Court has already found, supra, with respect to
Telsat's monopolization claim, Telsat has adequately alleged
anticompetitive conduct by ESPN. Complaint ¶ 20. Telsat has
also set forth an allegation of specific intent to monopolize
in paragraph 22 of its complaint, where it alleges: "ESPN has
engaged in an integrated series of predatory acts and
strategies designed to impose prohibitive costs on competitors
in the market for subscription television programming services
in the United States, to raise barriers to entry
and expansion in this market, to maintain ESPN's monopoly power
in this market and to prevent the market from becoming
competitive." Complaint ¶ 22. Moreover, the Second Circuit has
held that "[p]roof of the first element of an attempted
monopolization claim, anticompetitive or exclusionary conduct,
may be used to infer the second element, specific intent to
monopolize; . . ." Volvo, supra, 857 F.2d at 74. Finally, as to
the third element, a showing of a dangerous probability of
success, the Second Circuit has stated that "when coupled with
proof of monopoly power, evidence of anticompetitive conduct
may demonstrate" such a probability of success. Volvo, supra,
857 F.2d at 74; see also International Distribution Centers,
Inc. v. Walsh Trucking Co., Inc., 812 F.2d 786, 791 (2d Cir.),
cert. denied, 482 U.S. 915, 107 S.Ct. 3188, 96 L.Ed.2d 676
(1987). The Court has found, supra, a sufficient allegation of
ESPN's monopoly power. Complaint ¶ 13. This allegation, when
coupled with Telsat's allegation that ESPN has engaged in
anticompetitive conduct, Complaint ¶ 20, permits the inference
of a dangerous probability of success. Volvo, supra, 857 F.2d
at 74 ("since the complaint alleges both exclusionary conduct
and the existence of monopoly power, the third element, a
dangerous probability of success, may be inferred.") (emphasis
in original). ESPN's motion to dismiss the third claim,
attempted monopolization, must therefore be denied.
Fourth Claim: Monopolization of Certain Local Markets
The fourth claim asserted by Telsat avers that
[t]he conduct of ESPN constitutes monopolization
of certain local markets for cable television in
the United States . . . and an abuse and misuse of
monopoly power in those markets to gain a
competitve [sic] advantage and restrain trade
unreasonably in the market for subscription
television programming services in the United
States. . . . ESPN possesses monopoly power in
certain of the local markets for cable television
systems, and has willfully obtained and maintained
and exercised monopoly power, and has further used,
abused and minused [sic] monopoly power in certain
of the local markets for cable television to obtain
a competitive advantage, restrain trade, and
monopolize, conspire to monopolize, and attempt to
monopolize the market for subscription television
programming services in the United States.
Complaint ¶¶ 55, 56.
ESPN argues that this claim must be dismissed, as it is
unclear from the face of the complaint which local markets ESPN
is alleged to have monopolized. Memorandum of Law in Support of
ESPN's Motion to Dismiss the Complaint at 26. Telsat responds
in its memorandum opposing the instant motion, that "[t]he
local market affected by ESPN monopoly power is alleged as
Telsat's market at paragraphs 28 and 30" of the complaint.
Opposing Memorandum at 33. Paragraph 28 of the complaint avers
that "ESPN has abused and misused its monopoly power in the
local cable television market in which ESPN operates so as to
exclude, unreasonably and unjustifiably, Telsat, the key
competitor of the local [cable] operator in the Telsat market."
Complaint ¶ 28. ESPN, however, allegedly operates nationwide,
Complaint ¶ 21, and thus the phrase "the local cable television
market in which ESPN operates," Complaint ¶ 28, is meaningless.
The term "the Telsat market," Complaint ¶ 28, is likewise
unenlightening with respect to this issue, as Telsat's market
is the MMDS market, Complaint ¶ 5, not the local cable market.
Paragraph 30 of the complaint is similarly insufficient to
save Telsat's fourth claim. That paragraph alleges that "ESPN
has refused to offer its subscription services to Telsat on a
competitive basis in the affected local markets." Complaint
¶ 30. Again, there is no hint from which ESPN, or the Court,
may glean which markets Telsat is referring to in its fourth
claim. The phrase "the affected local markets" is conclusory to
the point of being tautological. Without more, the fourth claim
fails to provide the required "`short and plain statement of
the claim' that will give the defendant fair notice of
what plaintiff's claim is and the ground upon which it rests."
Conley, supra, 355 U.S. at 47, 78 S.Ct. at 103 (quoting
Fed.R.Civ.P. 8(a)). ESPN's motion to dismiss the fourth claim
is, therefore, granted.
Fifth Claim: Unreasonable Restraint of Trade
Claim five alleges that ESPN has contracted, combined or
conspired in an unreasonable restraint of trade in violation of
§ 1 of the Sherman Act, 15 U.S.C. § 1.*fn5 Complaint ¶ 59.
More specifically, Telsat claims that ESPN's refusal to
"promote" Telsat has "unreasonably restrained trade in the
market for subscription television programming services in the
United States." Complaint ¶ 59.
To state a claim under § 1 of the Sherman Act, Telsat must
allege that (1) ESPN entered into a contract, combination or
conspiracy, and (2) the conspiracy was "in restraint of trade
or commerce among the several States." 15 U.S.C. § 1; see also
Walsh Trucking, supra, 812 F.2d at 793; Frito-Lay, Inc. v.
Bachman Co., 659 F. Supp. 1129, 1133 (S.D.N.Y. 1986). Moreover,
as it must with respect to its conspiracy to monopolize claim
under § 2 of the Sherman Act, Telsat must do more than merely
allege that a conspiracy exists, it must provide some factual
basis for that allegation. See Garshman, supra, 824 F.2d at 230
("The allegation of unspecified contracts with unnamed other
entities to achieve unidentified anticompetitive effects does
not meet the minimum standards for pleading a conspiracy in
violation of the Sherman Act."); Heart Disease Research
Foundation, supra, 463 F.2d at 100 ("a bare bones statement of
conspiracy or of injury under the antitrust laws without any
supporting facts permits dismissal."); North Jersey Secretarial
School, Inc. v. McKiernan, 713 F. Supp. 577, 584 (S.D.N.Y. 1989)
(dismissing § 1 claim, holding that "[e]ven notice pleading
requires that facts be pleaded to support a conspiracy
claim."); International Television Productions Ltd v. Twentieth
Century-Fox Television Division of Twentieth Century-Fox Film
Corp., 622 F. Supp. 1532, 1537 (S.D.N.Y. 1985) (in asserting a §
1 claim, "[t]he complaint must identify the co-conspirators,
and described the nature and effects of the alleged
conspiracy."). This Telsat has failed to do. ESPN's motion to
dismiss the fifth claim is, therefore, granted.
Sixth and Seventh Claims: State Law Claims
ESPN has also moved for dismissal of Telsat's pendent state
law claims, should the federal claims be dismissed, on the
ground of lack of jurisdiction. See United Mine Workers v.
Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218
(1966); Riegel Textile Corp. v. Celanese Corp., 649 F.2d 894,
906 (2d Cir. 1981). However, the Court has denied ESPN's motion
to dismiss with respect to Telsat's first and third claims, and
thus a basis for federal jurisdiction remains under the Sherman
Act. Telsat's pendent claims, therefore, should not be
dismissed for lack of a federal claim on which to hang. Gibbs,
supra, 383 U.S. at 725, 86 S.Ct. at 1138. ESPN's motion to
dismiss the sixth and seventh claims is denied.
For the reasons set forth above, ESPN's motion to dismiss the
complaint, pursuant to Fed.R.Civ.P. 12(b)(6), is granted in
part and denied in part. Specifically, the motion to dismiss is
granted with respect to Telsat's second, fourth and fifth
claims, and is denied with respect to Telsat's first, third,
sixth and seventh claims. Leave to replead is granted.