Antitrust Law Daily Market-wide anticompetitive impact lacking in toy auction dispute
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Friday, January 29, 2016

Market-wide anticompetitive impact lacking in toy auction dispute

By Greg Hammond, J.D.

Two individuals that were purportedly hired as “experts” in a toy auction did not violate the Sherman, Clayton, and Robinson Patman Acts by poorly preparing the auction, the federal district court in Philadelphia has concluded. In granting the two individuals’ motion to dismiss the antitrust claims, the court determined that the plaintiffs did not even attempt to tie any supposed wrong-doing to any market-wide anticompetitive impact (Reese v. Pook & Pook, LLC, January 27, 2016, Stengel, L.).

The plaintiffs were required to sell a portion of their toy collection as part of their Chapter 11 bankruptcy. Defendant Pook & Pook, LLC was approved as the auctioneer to sell the toy collection, and defendants Mike Caffarella and Jay Lowe were hired as “experts” to assist the auction sale. The plaintiffs claim, however, that the staging of the sale was deliberately flawed to diminish the value of the toys because the toys were presented in piles with no effort to match parts into complete toys. They further allege that Lowe, who knew where the mismatched parts were located in the different lots, won the items at depressed prices, reassembled them, and placed them for resale at significant markup at his own business.

In addition to brining an antitrust claim under the Sherman, Clayton, and Robinson Patman Acts, the plaintiffs also alleged that Caffarella and Lowe violated the Lanham Act by engaging in false commercial advertising through negative commentary in an auction magazine about the quality of the collection. The case was before the court, in part, on Caffarella’s and Lowe’s motion to dismiss the Lanham Act and antitrust claims.

Commercial speech. The court first determined that the Lanham Act claim failed as a matter of law because: (1) there were no allegations that Caffarella engaged in any kind of commercial speech; and (2) the article that contained Lowe’s quotes did not qualify as commercial advertising or promotion. In particular, the court concluded that Lowe was quoted in an article reporting on events that already occurred, wherein he commented that the plaintiffs’ toys were middle market and failed to bring top dollar because of their less-than-perfect condition. The court reasoned that Lowe did not opine on the quality of the remaining toy collection, or on the quality of his own inventory of toys. He did not write or publish the article, and there were no allegations that he was responsible for the editorial content. Lastly, the article did not contain any ad or promotion of Lowe’s toy business, the court found.

A Lanham Act claim against the auction magazine was also dismissed because the article was published after the sale occurred and was a report of the sale itself. It was consequently implausible that any alleged falsity—even if considered commercial advertising or promotion—could have damaged the plaintiffs by impacting the value of the collection sold at auction.

Antitrust injury, anticompetitive impact, relevant market. Next, the court concluded that the plaintiffs completely failed to allege antitrust injury. The only allegation contained in the Sherman Act, Clayton Act, and Robinson Patman Act claims were that the “poor Pook & Pook sale preparation by Lowe/Caffarella was intentional, aimed at ensuring they and others could piecemeal make a killing off of the [plaintiffs] by purchasing seemingly disparate lots that, when combined, contained complete toys and ‘rare finds’ worth thousands of dollars more than the entire lot was purchased for.” The plaintiffs, however, made no attempt to tie the alleged wrongdoing of Lowe, Caffarella and Pook & Pook to any market-wide anticompetitive impact, according to the court. In addition, there was no attempt to define the relevant product market and the relevant geographic market.

The case is No. 14-5715.

Attorneys: Joseph A. O'Keefe (O'Keefe, Miller & Thielen, PC) for Carter P. Reese. David J. Shannon (Marshall Dennehey Warner Coleman & Goggin) for Pook & Pook, LLC.

Companies: Pook & Pook, LLC; Maine Antique Digest

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