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10 | Monday, august 11, 2014 | Commercial Litigation
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Channel Bundling
has further noted that “Brantley was a rule
be subject to further, fact-intensive inquiry. short of mandating an à la carte system, the

of reason and not a per se case.”
Cablevision must also now prove through legislation would condition the availability of 17
Viacom, for its part, accuses Cablevision of admissible evidence that Viacom maintains a television distributor’s statutory copyright
« Continued from page 3
taking positions that are at odds with those sufficient economic power in the tying prod- license on its voluntary offering of à la carte
“merely enhanc[e] the price” of the unpop- that it took as a defendant in Brantley. For uct market, however defined, and it is notable subscription models.22 Although the legisla-
ular channels, and that there could be no example, Cablevision argued in Brantley that that the Supreme Court has not clarified the tion has garnered a few endorsements, one
antitrust violation absent proof of an “actual channel bundling can be analyzed under the amount of market power that is necessary analysis predicts that it has only a 1 percent
adverse effect on competition” in the form rule of reason “because it was not conduct under the per se doctrine. For example, the chance of being enacted.23
of independent programmers being barred that is always pernicious (like price fixing) court in Jefferson Parish held that a 30 percent whatever its dim chances of success, the
from the tied market.The court found it with no conceivable legitimate purpose.”market share in the tying market was “far
14 18 specter of this legislation, taken together
significant that plaintiffs expressly dropped Indeed, the Ninth Circuit in Brantley observed from overwhelming” and that other factors with Swain’s initial decision in Cablevision,
allegations of anti-competitive effects after that “‘[t]he parties have disclaimed any con- that allowed the defendant hospital to charge may provide some measure of hope to those
discovery did not reveal any evidence that tention that the tying practices in this case non-competitive prices failed to “establish within and without the television industry
defendants’ contractual practices foreclosed are per se antitrust violations,’” and that the kind of dominant market position” that that have criticized channel bundling. Assess-
independent programmers from participat- the alleged tying “may be a response to a entitles a plaintiff to a finding that the tying ing the future of this issue, however, remains
ing in the programming market.15 Instead, competitive market rather than an attempt
arrangement is per se illegal.20
an unsettled proposition at least until an
Plaintiffs solely focused on the purported to circumvent it.”19
Additionally, if Cablevision cannot ulti- ultimate resolution in Cablevision and any
harm to consumers—in the form of higher Swain did not touch on Brantley at all in
mately show that Viacom has sufficient mar- similar, future cases.
prices—from the required sale of multi-chan- denying Viacom’s motion to dismiss. It is pos- ket power in the tying market—particularly
•••
nel packages. To the Ninth Circuit, neither sible that the court agreed with Cablevision if that market is broadly defined to include ••••••••••••••••••••••••••
increased commercial pricing nor a reduction that Brantley is sufficiently distinct given that many sellers and a variety of entertainment 1. ABC v. Aereo, --- S. Ct. ---, 2014 wL 2864485 (U.S. June
in commercial choices was enough to sustain the plaintiffs there pursued a rule of reason offerings—Cablevision may also yet have to 25, 2014).
a tying claim under the rule of reason, without theory against virtually an entire industry prove the “anticompetitive effects” of Via- 2. No. 13 Civ. 1278(LTS)(JLC), 2014 wL 2805256
a further showing that such practices were (rather than one defendant), and did not com’s actions under a rule of reason analysis. (S.D.N.Y. June 20, 2014).
3. 675 F.3d 1192 (9th Cir. 2012), cert. den., 133 S. Ct.
anticompetitive.
ultimately allege that the bundling arrange- while Cablevision was careful to plead mar- 573 (Nov. 5, 2012).
ments at issue forced either distributors or ket foreclosure in the tied market, it remains 4. 15 U.S.C. §1.
consumers to forgo the purchase of alterna- an open question whether Cablevision can 5. N. Pac. Ry. Co. v. United States, 356 U.S. 1, 5-6 (1958).
Potential Impact of ‘Brantley’
6. Motion Picture Patents v. Universal Film, 243 U.S.
502, 518 (1917).
tive low-demand channels. It is also possible marshal sufficient evidence in that regard if it 7. See Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466
At first impression, it would appear that that the New York district court simply did cannot show that Viacom wielded adequate U.S. 2, 9-12 (1984).
Brantley, even though it was brought by not view the Ninth Circuit’s analysis as bind- market power.
8. 2014 wL 2805256 at *2.
consumers and not a distributor, poses ing from a jurisdictional perspective. Given 9. Id. (citing In re Wireless Telephone Services Anti-
some obstacles for Cablevision. Cablevi- the similarities in claims, however, as well as Legislative Front
trust Litig., 385 F. Supp. 2d 403, 414 (S.D.N.Y. 2005)). 10. Id.
sion argues, though, that its allegations go Cablevision’s prior status as a defendant in 11. Id. at *3.
beyond those of the plaintiffs in Brantley, Brantley, it would certainly not be surprising Cablevision also unfolds against a back- 12. See United States v. Paramount Pictures, 334 U.S.
because it asserts that if it did not have to if Brantley continues to infuse Viacom’s legal drop of legislative activity, but one which 131, 156-58 (1948).
license all of Viacom’s channels, “it would arguments going forward.
appears to have stalled. In introducing the 13. Brantley, 675 F.3d at 1195, 1200.
14. Id. at 1200.
15. Id. at 1196.
license other general programming net- Television Consumer Freedom Act of 2013, 16. Cablevision Opp. to Motion to Dismiss (Docket No.
works” from other content providers, and Cablevision’s Remaining Legal Challenges
McCain obliquely referred to Cablevision’s liti- 33, Oct. 4, 2013), at 13.
that “other distributors” would do so as gation, noting that under his legislation, “if a 17. Id. at 23.
well.16 As a result, Cablevision maintains Despite Cablevision’s initial success, it still cable operator doesn’t want to carry channels 18. Viacom reply Mem. of Law (Docket No. 37, Nov.
that Viacom’s rivals have been harmed in faces several hurdles before it can prevail on like [Viacom-owned] MTV, it would have the 8, 2013), at 5-6.
19. Brantley, 675 F.3d at 1197 n.7, 1199.
their attempts to compete more vigorously the merits. For one thing, no court has ever option of not doing so and only buying, and 20. Jefferson Parish, 466 U.S. at 26-27.
with Viacom. Brantley, by contrast, did not found that channel bundling in the cable and carrying, the channels it thinks its consumers 21. “Senator John McCain Introduces New ‘A La Carte’
include such allegations, which, according satellite industry constitutes a tying violation. want to watch.”21 The proposed legislation, Bill,” available at http://www.mccain.senate.gov/public/
index.cfm/press-releases?ID=8a5d2818-ac05-71a2-5eae-
to Cablevision, provide enough detail of Moreover, the economic viability of Cablevi- among other things, encourages the unbun- 5b58400e0019 (quoting Floor remarks, May 8, 2013).
22. Id.
a “substantial foreclosed volume of com- sion’s proposed, alternative market defini- dling of television programming by both pro- 23. GovTrack.us, available at https://www.govtrack.
merce” to satisfy its burden. Cablevision
tions in the tying product market will now
grammers and distributors. while stopping
us/congress/bills/113/s912.

Automatic Stay
or’s bankruptcy estate, of a judgment obtained before 1987)).
22. Id. at *9-10 (citing Sonnax, 907 F.2d at 1286).
the bankruptcy case. 11 U.S.C. §362(a)(2).
3. Keene v. Acstar Ins. (In re Keene), 162 B.r. 935, 944 12. The Second Circuit has interpreted §362(k)’s refer-
ence to “individuals” to limit the provision’s application 23. Id. at *10 (citing Spencer v. Bogdanovich (In re
(Bankr. S.D.N.Y. 1994).
to natural person debtors, and not corporate entities. Bogdanovich), 292 F.3d 104, 110 (2d Cir. 2002), citing Mazzeo v. Lenhart (In re Mazzeo), 167 F.3d 139, 143 (2d
« 4. e.g., Mount Canaan Full Gospel Church v. Kerr-Mc- Maritime Asbestosis Legal Clinic v. LTV Steel (In re Cha- Cir. 1999)).
Continued from page 7
gee Ref. (In re Tronox), No. 09-10156, Adv. Pro. No. 09- teaugay), 920 F.2d 183, 186-87 (2d Cir. 1990); cf. Budget 24. Fed. r. Bankr. P. 4001(a)(1)-(2).
stay relief from the bankruptcy court, to con- 01537 (ALG), 2011 Bankr. LeXIS 441, at *2 (Bankr. S.D.N.Y. Serv. v. Better Homes, 804 F.2d 289, 292 (4th Cir. 1986).
25. Residential Capital, 2012 Bankr. LeXIS 3624, at
sider dismissing the debtor from the lawsuit Feb. 4, 2011).
5. e.g., In re Residential Capital, No. 12-12020 (MG), 13. 11 U.S.C. 362(k); In re Griffin, 415 B.r. 64, 68 (Bankr. N.D.N.Y. 2009).
*10 (citing Sonnax, 907 F.2d at 1285; Capital Comm. Fed.
in order to seek third-party discovery from 2014 Bankr. LeXIS 2635, at *7 (Bankr. S.D.N.Y. June 5, 14. In re Crysen/Montenay Energy, 902 F.2d 1098, 1105 Credit Union v. Boodrow (In re Boodrow), 126 F.3d 43, 48
the debtor and/or to determine whether to 2014).
(2d Cir. 1990); Ebadi, 448 B.r. at 320.
(2d Cir. 1997)).
26. Id. at *10-11 (quoting In re Leibowitz, 147 B.r. 341,
file a proof of claim in the bankruptcy. Above 6. e.g., In re Residential Capital, No. 12-12020 (MG), 15. Crysen/Montenay Energy, 902 F.2d at 1105.
345 (Bankr. S.D.N.Y. 1992)).
all else, commercial litigators should exer- 2012 Bankr. LeXIS 3641, at *25 (Bankr. S.D.N.Y. Aug. 8, 16. 11 U.S.C. §105(a); In re Am. Med. Utilization Mgmt., 27. 11 U.S.C. §502(c).
cise caution and err on the side of restraint 2012).
7. Hamm v. R. H. Macy & Co., 93 Civ. 1446 (LAP), 1994 494 B.r. 626, 635 (Bankr. e.D.N.Y. 2013) (citing Cha- teaugay, 920 F.2d at 186-87).
28. Groner v. Miller (In re Miller), 262 B.r. 499, 505 (9th
when navigating the automatic stay given the U.S. Dist. LeXIS 13034, at *5 n.1 (S.D.N.Y. Sept. 13, 1994).
17. Am. Med. Utilization Mgmt., 494 B.r. at 635 (quot- Cir. B.A.P. 2001); In re Residential Capital, 480 B.r. 529,
8. In re Bidermann Indus. U.S.A., 200 B.r. 779, 782 ing Chateaugay, 920 F.2d at 187, citing Crysen/Montenay 544 (Bankr. S.D.N.Y. 2012).
consequences that are potentially at stake.
(Bankr. S.D.N.Y. 1996).
Energy, 902 F.2d at 1104).
29. 11 U.S.C. §521; Fed. r. Bankr. P. 1007.
30. See Pope v. Manville Forest Prods., 778 F.2d 238,
•9. In re Jandous Electric Constr., 106 B.r. 48, 50 (Bankr. 18. Id. at 635-37.
239 (5th Cir. 1985); Hamm, 1994 U.S. Dist. LeXIS 13034,
••••••••••••• ••••••••••••• ••
S.D.N.Y. 1989).
10. Fed. r. Bankr. P. 9027(a)(3); see, e.g., Sawyer v. 19. 11 U.S.C. §362(d)(1)-(4); In re 473 West End Realty, 507 B.r. 496, 502 (Bankr. S.D.N.Y. 2014).
at *5 n.1.
1. The Bankruptcy Code provides some exceptions to Omaha 100 (In re Sawyer), No. 10-80270-TJM, Adv. No. 20. 11 U.S.C. §362(d)(1); Sonnax Indus. v. Tri Compo- 31. Residential Capital, 480 B.r. at 537, 539, 544
the automatic stay; however, the exceptions are gener- 10-8032-TJM, 8:10CV189, 2010 Bankr. LeXIS 2365, at *1 nent Products (In re Sonnax Indus.), 907 F.2d 1280, 1285 (courts should consider: (1) scope of requested discov-
ally not applicable in the commercial litigation context. (Bankr. D. Neb. July 22, 2010).
(2d Cir. 1990) (“Because the instant case concerns a stay ery; (2) context in which request arises; (3) the need for
See generally 11 U.S.C. §362(b).
2. 11 U.S.C. §362(a)(1). Also of particular relevance 11. In re Ebadi, 448 B.r. 308, 313 (Bankr. e.D.N.Y. 2011) of a judicial proceeding, only Section 362(d)(1) is appli- the discovery; (4) timing of the discovery; (5) burden on
to commercial litigators, the automatic stay prohibits (citing Rexnord Hldgs. v. Bidermann, 21 F.3d 522, 527 (2d Cir. 1994), citing 48th St. Steakhouse v. Rockefeller cable.”).
21. In re Residential Capital, No. 12-12020 (MG), 2012 the debtors from the requested discovery; and (6) ex- pense of discovery and who should bear cost; “[n]o one
enforcement, against the debtor or property of the debt-
Grp. (In re 48th St. Steakhouse), 835 F.2d 427, 431 (2d Cir.
Bankr. LeXIS 3624, at *9 (Bankr. S.D.N.Y. Aug. 7, 2012).
factor is determinative ... ”).
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