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Cates v. Crystal Clear Technologies, LLC

United States District Court, M.D. Tennessee, Nashville Division

November 14, 2016

COURTNEY CATES, BRIAN STOVER, and JASON MILLER, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
CRYSTAL CLEAR TECHNOLOGIES, LLC; CARBINE & ASSOCIATES, LLC; HOOD DEVELOPMENT, LLC; TOLLGATE VILLAGE ASSOCIATION, INC.; BRIDGEMORE VILLAGE OWNERS' ASSOCIATION, INC.; CANTERBURY HOMEOWNERS ASSOCIATION, INC.; TOLLGATE FARMS, LLC; BRIDGEMORE DEVELOPMENT GROUP, LLC; and DIRECTV, LLC, Defendants.

          MEMORANDUM & ORDER

          ALETA A. TRAUGER United States District Judge.

         Pending before the court is the plaintiffs' Motion to Set Aside the Judgment and Amend the Complaint (Docket No. 98), to which defendants Crystal Clear Technologies, LLC (“Crystal Clear”) and Carbine & Associates, LLC (“Carbine”) have filed a Response (Docket No. 101), defendants Tollgate Village Association, Inc. (the “Tollgate POA”) and Bridgemore Village Owners' Association, Inc. (the “Bridgemore POA”) have filed a Response (Docket No. 102), defendant DIRECTV, LLC (“DIRECTV”) has filed a Response (Docket No. 103), and the plaintiffs have filed a Reply (Docket No 104). Defendants Hood Development, LLC (“Hood”) and Canterbury Homeowners Association, Inc. (“Canterbury”) have not responded because all claims against them have purportedly been settled. For the reasons stated herein, the motion will be denied.

         BACKGROUND AND PROCEDURAL HISTORY

         On February 15, 2016, the plaintiffs, residents of three planned residential communities in Thompson's Station, Tennessee (the “Neighborhoods”) filed the Amended Complaint in this proposed class action against the Neighborhoods' developers and homeowners' associations, as well as Crystal Clear, an intermediary through which the plaintiffs are bound to purchase their telecommunications services, and DIRECTV, the telecommunications provider that has contracted with Crystal Clear to provide basic services to the Neighborhoods. The Amended Complaint, which was premised on the theory that Crystal Clear is operated by the same entity as the original developers and homeowners' associations (the “Carbine Family”) and that its contracts with these other defendants are not the result of arms-length transactions, contained the following counts:

• Count I for unlawful tying in violation of Section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1 (the “Sherman Act”)
• Count II for unlawful market allocation in violation of the Sherman Act
• Count III for self-dealing under Tennessee common law
• Count IV for violation of the following Federal Communications Commission Order: In the Matter of Exclusive Service Contracts for Provision of Video Services in Multiple Dwelling Units and Other Real Estate Developments, 22 FCC Rcd. 20235 (2007) (the “FCC Exclusivity Order”)
• Count V for unjust enrichment under Tennessee common law
• Count VI for unconscionability under Tennessee common law

         On August 17, 2016, the court issued an order dismissing the Amended Complaint in this action without prejudice, along with an accompanying Memorandum (the “Prior Decision”). (Docket Nos. 95, 96.) The Prior Decision, familiarity with which is presumed, contains a more detailed discussion of the factual allegations in the Amended Complaint and the grounds for dismissal, which will not be repeated herein. Briefly, the Prior Decision held that the plaintiffs had failed to sufficiently plead the elements of their federal law claims, and the court declined to extend supplemental jurisdiction over the remaining Tennessee common law claims, which the plaintiffs conceded were not brought against defendant DIRECTV (the only out-of-state defendant) and, therefore, could not proceed on grounds on diversity jurisdiction. (Id.) In particular, the court found that the plaintiffs' Sherman Act unlawful tying claim could not proceed because the plaintiffs had failed to a) identify a market for the tying product and allege that the defendants had substantial power in that market, and b) allege that the tying had a substantial effect on the tied market. (Id. at pp. 15-18 (citing Michigan Division-Monument Builders of North Am. v. Michigan Cemetery Ass'n, 524 F.3d 726, 732-33 (6th Cir. 2008).) The court also found that the plaintiffs' claim for violating the FCC Exclusivity Order could not proceed because the plaintiffs had not alleged that Crystal Clear is either a cable provider under the specific relevant statutory definition, nor that it had exclusive rights to provide cable services to the neighborhoods at issue. Instead, the plaintiffs had alleged facts to the contrary, namely that Crystal Clear is unable to provide telecommunications services on its own and that the relevant agreements specifically provided for the provision of telecommunications services by other providers. (Id. at pp. 22-24.) Finally, the Prior Decision held that the unlawful allocation claim could not proceed because the plaintiffs had not alleged an agreement between horizontal competitors. (Id. at p. 20.)

         Following the Prior Decision, the clerk of court issued an entry of judgment and the matter was closed. (Docket No. 97.)

         On September 14, 2016, the plaintiffs filed a Motion to Set Aside the Judgment and Amend the Complaint, along with an accompanying Memorandum, asking the court to set aside the Prior Decision and allow the plaintiffs to file their attached proposed Second Amended Class Action Complaint. (Docket Nos. 98, 99.)

         In their Memorandum, the plaintiffs state that, pursuant to a settlement agreement with the Canterbury POA, their proposed Second Amended Complaint does not name the Canterbury POA or Hood as defendants. (Docket No. 99, p. 2.) Additionally, the plaintiffs state that, while the proposed Second Amended Complaint retains Count II from the Amended Complaint in order to preserve this claim for appeal, the plaintiffs do not actually contest the court's dismissal of this claim or intend to pursue the unlawful market allocation claim at this time if the case is reopened. (Id.) Additionally, the proposed Second Amended Complaint does not name DIRECTV ...


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