In re Keurig Green Mountain Single-Serve Coffee Antitrust Litig. (383 F. Supp. 3d 187, 2019)

United States District Court for the Southern District of Illinois 2019-04-03

Commerce and Trade Judiciary and Judicial Procedure Patents

Citations

Full opinion text

Vernon S. Broderick, United States District Judge

Before me are four motions to dismiss filed by Defendant Keurig Green Mountain, Inc. ("Keurig" or "Defendant"), formerly known as Green Mountain Coffee Roasters, Inc. and as successor to Keurig, Incorporated, in this multi-district litigation. This Opinion & Order addresses all pending motions, which seek dismissal of four separate amended complaints: (1) the First Amended and Supplemental Complaint of Plaintiff JBR, Inc. (d/b/a Rogers Family Company) ("Rogers"), a privately held roaster, packager, and seller of coffee products, which alleges that Keurig has engaged in anticompetitive practices that had the effect of excluding Rogers from the market for cups or pods used in Keurig's single-server brewer machines, (No. 14-CV-4242, Doc. 83 (the "Rogers Amended Complaint" or "Rogers AC")); (2) the Amended and Supplemental Complaint of Plaintiff TreeHouse Foods, Inc., a food manufacturer operating in the United States, as well as its wholly-owned subsidiaries Plaintiff Bay Valley Foods, LLC ("Bay Valley") and Plaintiff Sturm Foods, Inc. ("Sturm") (collectively, "TreeHouse"), which claims that Keurig's allegedly anticompetitive practices excluded TreeHouse from the same market, (No. 14-CV-905, Doc. 86; (the "TreeHouse Amended Complaint" or "TreeHouse AC")); (3) the Consolidated Amended Class Action Complaint of direct purchaser Plaintiffs Kenneth B. Burkley, Roger Davidson, Judy Hoyer, Benjamin Krajcir, James G. Long, Linda Major, Sally Rizzo, Henry A. Rocker, David Rosenthal, and Todd W. Springer (collectively, the "DPP Named Plaintiffs"), individually and on behalf of a class of direct purchaser plaintiffs, (collectively, the "DPPs"), which claims that Keurig's allegedly anticompetitive practices caused the DPPs to be overcharged for their purchases of cups or pods used in Keurig's single-server brewer machines, (Doc. 237 (the "DPP Amended Complaint" or "DPP AC")); and (4) the Second Consolidated Amended Class Action Complaint of indirect purchaser Plaintiffs Yelda Mesbah Bartlett, Lavinia Simona Biasell, Linda Bouchard, Bouchard & Sons Garage, Inc., Jessica Searles Cristani, Kathryn Pauline D'Agostino, Jonna Dugan, Michael J. Flanagan, Larry Gallant, Patricia Hall, Joseph Hurvitz, Jackson & Runyan, Certified Public Accountants, PLLC, Teena Marie Johnson, Darlene M. Kennedy, Lori Jo Kirkhart, John Lohin, Betty Ramey, Brier Miller Minor, David W. Nation, Patricia J. Nelson, Joyce E. Reynolds, Lauren Jill Schneider, Shirley Anne Schroeder, Rhett Montgomery Tanselle, Carey Rei Varnado, Constance Werthe, and Toni Williams (collectively, the "IPP Named Plaintiffs"), individually and on behalf of a class of indirect purchaser plaintiffs, (collectively, the "IPPs"), which claims that Keurig's allegedly anticompetitive practices caused the IPPs to be overcharged for their purchases of cups or pods used in Keurig's single-server brewer machines, (Doc. 238 (the "IPP Second Amended Complaint" or "IPP SAC")).

The Rogers Amended Complaint, TreeHouse Amended Complaint, DPP Amended Complaint, and IPP Second Amended Complaint all allege violations of Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2, and the Clayton Act, 15 U.S.C. § 14. (Rogers AC ¶¶ 294-331, 338-82; TreeHouse AC ¶¶ 569-602, 611-38; DPP AC ¶¶ 254-89; IPP SAC ¶¶ 251-94.) The Rogers Amended Complaint and TreeHouse Amended Complaint also allege claims for violations of the Lanham Act, 15 U.S.C. § 1125(a), (Rogers AC ¶¶ 383-88; TreeHouse AC ¶¶ 639-43), and for patent misuse, (Rogers AC ¶¶ 332-37; TreeHouse AC ¶¶ 603-10). The DPP Amended Complaint alleges claims for common law unjust enrichment under the laws of the fifty states and the District of Columbia, (DPP AC ¶¶ 290-300), and the IPP Second Amended Complaint raises claims for common law unjust enrichment under the laws of seventeen states and the District of Columbia, (IPP SAC ¶¶ 481-516).

The Rogers Amended Complaint also alleges claims for violation of the California Cartwright Act, (Rogers AC ¶¶ 389-90), and for: (1) violation of the California False Advertising Law, (id. ¶¶ 393-97); (2) violation of the California Unfair Competition Law, (id. ¶¶ 398-406); (3) violation of California common law unfair competition, (id. ¶¶ 391-92); (4) intentional interference with prospective economic advantage under California law, (id. ¶¶ 407-11); and (5) intentional interference with contractual relations under California law, (id. ¶¶ 412-14). The TreeHouse Amended Complaint also alleges claims for violations of: (1) the Illinois Antitrust Act, (TreeHouse AC ¶¶ 569-602, 611-38, 650-53); (2) the Wisconsin Antitrust Act, (id. ¶¶ 569-602, 611-38, 654-57); (3) the New York Donnelly Act, (id. ¶¶ 577-84, 625-38, 644-45); (4) the Illinois Consumer Fraud and Deceptive Business Practices Act, (id. ¶¶ 639-43); (5) the New York Consumer Protection Act, (id. ); (6) the Illinois Uniform Deceptive Trade Practices Act, (id. ¶¶ 639-43, 646-49); and (7) Wisconsin common law unfair competition, (id. ¶¶ 658-61). The TreeHouse Amended Complaint also alleges claims for negligent and intentional interference with business relations under New York law, (id. ¶¶ 662-70), tortious interference with contract under New York Law, (id. ¶¶ 671-77), tortious interference with contract under Wisconsin law, (id. ¶¶ 678-80), tortious interference with prospective business expectancy under Illinois law, (id. ¶¶ 681-84), and tortious interference with contract under Illinois law, (id. ¶¶ 685-91). The IPP Second Amended Complaint alleges violations of the antitrust and unfair competition laws of twenty-one states and the District of Columbia, (IPP SAC ¶¶ 225-50, 295-447), and the consumer protection and unfair trade practices laws of six states, (id. ¶¶ 448-80). Keurig purports to move to dismiss the amended complaints in each action in their entirety under Federal Rule of Civil Procedure 12(b)(6). I held oral argument on these motions on July 9, 2015.

For the reasons stated herein, Keurig's motions are granted in part and denied in part.

I. Background

A. Keurig's Products and the Relevant Markets

Keurig manufactures and sells Single Serve Brewers and Portion Packs in, among other places, the United States. (Rogers AC ¶¶ 9, 82; TreeHouse AC ¶ 3; DPP AC ¶¶ 1, 7; IPP SAC ¶ 7.) Keurig introduced the K-Cup Brewer, the first commercially successful Single Serve Brewer, to the United States market in or around 1998. (Rogers AC ¶ 19; see also IPP SAC ¶ 110.) While Portion Packs come in many different forms, to be usable with a particular Single Serve Brewer, a Portion Pack must be compatible with that Single Serve Brewer. (DPP AC ¶ 8.) The same year it introduced the K-Cup Brewer, Keurig introduced its branded Portion Packs, or K-Cups, which are compatible with and used in K-Cup Brewers. (See TreeHouse AC ¶¶ 3, 110.) Today, K-Cups also include Portion Packs licensed by Keurig that are compatible with K-Cup Brewers. (Rogers AC ¶ 31; TreeHouse AC ¶ 4; DPP AC ¶ 9; IPP SAC ¶ 9.)

K-Cups are not the only Portion Packs that are compatible with K-Cup Brewers. Keurig's competitors, including Rogers and TreeHouse, manufacture, distribute, and sell their own Competitor Cups, which are Portion Packs that are compatible with K-Cup Brewers. (Rogers AC ¶ 31; TreeHouse AC ¶¶ 105-06; DPP AC ¶ 9; IPP SAC ¶¶ 8-11.) Compatible Cups -Portion Packs that are compatible with K-Cup Brewers-thus include (i) K-Cups, and (ii) Competitor Cups. (Rogers AC ¶ 31; TreeHouse AC ¶¶ 105-06; DPP AC ¶ 9; IPP SAC ¶¶ 8-11.)

Since Keurig's initial introduction, Keurig has designed, manufactured, and sold a variety of different K-Cup Brewers marketed either for use in the individual consumer's home or for use outside the home at locations such as office buildings, hotels, and gas stations. (Rogers AC ¶ 19.) K-Cup Brewers are compatible only with Compatible Cups, and Portion Packs designed to work in other Single Serve Brewers are not compatible with K-Cup Brewers. (IPP SAC ¶ 93.) Keurig has dominated the markets for the design, manufacture, and sale of Single Serve Brewers, Portion Packs, and Compatible Cups. Specifically, in the United States, Keurig controls at least 89% of the market for Single Serve Brewers (the "Single Serve Brewer Market"), 73% of the market for Portion Packs (the "Portion Pack Market"), and 95% of the market for Compatible Cups (the "Compatible Cup Market"). (Rogers AC ¶¶ 27, 46, 59; TreeHouse AC ¶¶ 6, 83, 128, 151; DPP AC ¶¶ 9, 10; IPP SAC ¶¶ 69, 87.)

B. Growing Competition Against Keurig

Until 2012, Keurig had patents covering the filter technology used in its K-Cups ("K-Cup Filter Patents"). (TreeHouse AC ¶ 4; DPP AC ¶¶ 4, 15; IPP SAC ¶ 125.) Virtually all Compatible Cups on the market were K-Cups until 2010. (Rogers AC ¶ 34.) In 2010, TreeHouse decided to undertake a substantial investment in order to enter the Compatible Cup market, (TreeHouse AC ¶ 210), but because the K-Cup Filter Patents covering the use of filters in Portion Packs had not yet expired, TreeHouse decided to manufacture and sell Competitor Cups that did not contain filters. (Id. ¶ 214.) In August 2010, TreeHouse subsidiary Sturm introduced the first Compatible Cups for use in K-Cup Brewers that were neither sold by Keurig nor under a Keurig license. (Id. ¶ 215; Rogers AC ¶ 35; DPP AC ¶¶ 126-27; IPP SAC ¶ 128.)

In October 2011, Rogers introduced to the market its first Compatible Cups for use in K-Cup Brewers, in its proprietary OneCup format under its "San Francisco Bay" and "Organic Coffee Company" brands. (Rogers AC ¶ 36.) Rogers' initial version of OneCup reduced the environmental footprint and contained 30% to 35% less packaging than other Compatible Portion Packs. (Id. ) In October 2013, Rogers introduced a unique 97% biodegradable Compatible Cup. (Id. ) Rogers sells or has sold its packs through retailers such as Costco and Amazon. (Id. ¶¶ 70, 289.) Sales of its OneCup Portion Pack account for more than 40% of Rogers' business. (Id. ¶ 277.)

When the K-Cup Filter Patents expired in 2012, a number of companies launched, or announced plans to launch, Portion Packs compatible with K-Cup Brewers. (TreeHouse AC ¶¶ 15, 216-18.) TreeHouse launched its first filtered Competitor Cups in the Fall of 2012, which were sold at a lower price than Keurig's filtered K-Cups. (Id. ¶ 219.) Between September 2012 and December 2013, TreeHouse subsidiary Bay Valley entered into supply arrangements with dozens of retailers for filtered Competitor Cups. (Id. ¶ 220.)

C. Keurig's Anti-Competitive Conduct

Threatened by this competitive pressure, Keurig took various steps to regain its "complete control" of the market for Competitor Cups, including (i) filing baseless lawsuits against Rogers and TreeHouse, (Rogers AC ¶¶ 158-75; TreeHouse AC ¶¶ 226-40; DPP AC ¶¶ 125-38; IPP SAC ¶¶ 124-35); (ii) entering into "non-competition," tying, and exclusive dealing agreements and threatening companies who would do business with Compatible Cup manufacturers, (Rogers AC ¶¶ 87-154; TreeHouse AC ¶¶ 225, 241-397; DPP AC ¶¶ 139-96; IPP SAC ¶¶ 141-206); (iii) redesigning K-Cup Brewers and introducing the Keurig 2.0 K-Cup Brewer (the "2.0 Brewer") to lock out Competitor Cups and misinforming customers about the motivation for, and the abilities of, this lock-out technology, (Rogers AC ¶¶ 176-232; TreeHouse AC ¶¶ 225, 398-458; DPP AC ¶¶ 221-35; IPP SAC ¶¶ 136-40); and (iv) maligning Competitor Cups and otherwise interfering with competitors' business relationships, (Rogers AC ¶¶ 233-67; TreeHouse AC ¶¶ 225, 459-548; DPP AC ¶¶ 197-220).

1. Patent Litigations

Within a matter of weeks after Sturm's introduction of its Competitor Cups, Keurig sued Sturm for patent and trademark infringement and false advertising, (the "TreeHouse Litigation"). (Rogers AC ¶ 158; TreeHouse AC ¶¶ 228-30; DPP AC ¶ 128; IPP SAC ¶ 129.) The District Court for the District of Delaware dismissed Keurig's patent claims on summary judgment, which Keurig appealed. (Rogers AC ¶ 163; TreeHouse AC ¶ 235; DPP AC ¶¶ 131-33; IPP SAC ¶¶ 130-31.) The Federal Circuit affirmed the District Court's ruling, reasoning that Keurig was attempting to make an "end-run" around the patent laws with "a tactic that the Supreme Court has explicitly admonished," and that it was attempting "to impermissibly restrict purchasers of Keurig brewers from using non-Keurig [Competitor Cups] by invoking patent law." (Rogers AC ¶ 170 (quoting Keurig, Inc. v. Sturm Foods, Inc. , 732 F.3d 1370, 1374 (Fed. Cir. 2013) ); TreeHouse AC ¶¶ 236-37 (same); DPP AC ¶¶ 133, 137 (same); IPP SAC ¶ 131 (same).)

Similarly, in 2011, Keurig sued Rogers, just weeks after Rogers began selling its Competitor Cups. (Rogers AC ¶ 158; TreeHouse AC ¶ 239; DPP AC ¶ 136; IPP SAC ¶ 133.) In May 2013, the District Court for the District of Massachusetts granted Rogers' motion for summary judgment, holding that Rogers' designs were "sufficiently distinct" and quoted the district court's decision in the TreeHouse Litigation in admonishing Keurig for "attempting to institute a postsale restriction that prevents non-Keurig cartridges from being used in Keurig brewers." (Rogers AC ¶ 321 (quoting Keurig, Inc. v. JBR, Inc. , No. 11-11941-FDS, 2013 WL 2304171, at *12 (D. Mass. May 24, 2013), aff'd , 558 F. App'x 1009 (Fed. Cir. 2014) ); TreeHouse AC ¶ 239 (same); DPP AC ¶ 136; IPP SAC ¶ 134 (same).) After Keurig appealed, the Federal Circuit Court affirmed the district court's grant of summary judgment in Rogers' favor. (Rogers AC ¶¶ 171, 322; IPP SAC ¶ 135.)

Keurig pursued its claims relying on a theory of liability that had been previously rejected by the United States Supreme Court, as noted by the Federal Circuit in denying Keurig's appeal of the District Court's ruling in the TreeHouse action. (Rogers AC ¶ 170; TreeHouse AC ¶ 236; DPP AC ¶ 133; IPP SAC ¶ 131.) Plaintiffs allege that Keurig's patent claims had no objective basis, and they imposed costs on competitors and cast a cloud over the legality and legitimacy of competitors' products, which impeded market acceptance of those products and deterred other competitors from entering the market. (Rogers AC ¶¶ 172-74; TreeHouse AC ¶¶ 238-40; DPP AC ¶ 138; IPP SAC ¶¶ 124-27.)

2. Exclusive and Restrictive Agreements

Plaintiffs allege that Keurig has entered into over 600 exclusive and restrictive agreements with various entities involved in the line of manufacture and distribution of Compatible Cups, as well as with potential competitors. For example, Keurig entered into exclusive agreements with, or otherwise coerced, suppliers of the machinery required to manufacture Compatible Cups; suppliers of the cups, lids, and filters required in Compatible Cups; and suppliers of the lock-out technology, a special taggant ink that is included on the lid of the Compatible Cup, incorporated in the 2.0 Brewer, to keep competitors from sourcing the technology. (Treehouse AC ¶¶ 2, 54, 143, 244-85, 401; DPP AC ¶¶ 169-91; IPP SAC ¶¶ 141-52.)

In addition, Keurig has locked up virtually all of the distributors who provide Compatible Cups for use outside of the home (the "Away-From-Home Market Segment") in long-term exclusive contracts. (Rogers AC ¶¶ 87-106; DPP AC ¶¶ 162-68; IPP SAC ¶¶ 173-200.) Keurig-in an apparent effort to foreclose the entry of or expansion by competitors in the home use market-entered into exclusive contracts with large retailers that serve the consumers who use Compatible Cups at home (the "At-Home Market Segment"), (Rogers AC ¶¶ 107-11; DPP AC ¶¶ 162-68; IPP SAC ¶¶ 173-200). That effort has been aided by Keurig's exclusive contracts with numerous major coffee brands ("Roasters"), which limited the ability of Roasters to provide inputs to or enter into other agreements with Competitor Cup manufacturers, as well as prevent Roasters from entering the Single Serve Brewer Market. (Rogers AC ¶¶ 112-54; Treehouse AC ¶¶ 286-330; DPP AC ¶¶ 139-61; IPP SAC ¶¶ 153-72.) As of November 2014, Keurig admitted that it has "now signed the large majority of previously unlicensed portion pack volume to our system and we're in the process of transitioning these brands." (Rogers AC ¶ 201 (quoting Keurig Green Moutain's (GMCR) CEO Brian Kelley on Q4 2014 Results - Earnings Call Transcript , Seeking Alpha (Nov. 20, 2014), http://seekingalpha.com/article/2697145-keurig-green-mountains-gmcr-ceo-brian-kelley-on-q4-2014-results-earnings-calltranscript?all=true &find=keurig).) Keurig also eliminated potential competitors through acquisitions of competitors and previous licensees. (Rogers AC ¶¶ 155-57; DPP AC ¶¶ 14-15, 122-24; IPP SAC ¶¶ 118-20.)

3. False Advertising and Promotional Efforts

Keurig has engaged in false, deceptive, and/or misleading advertising and promotional efforts directed at consumers and retail customers regarding the key qualities and characteristics of its K-Cup Brewers, K-Cups, and Competitor Cups made by TreeHouse, Rogers, and others. (Rogers AC ¶ 233; TreeHouse AC ¶¶ 459-62; DPP AC ¶¶ 197-220.) Those efforts were intended to and did drive up Keurig's own sales while eliminating or diminishing competition from Competitive Cup makers by sullying their reputations. (TreeHouse AC ¶ 459.)

For example, despite learning that competitors had developed Compatible Cups that worked in the 2.0 Brewer, Keurig has continued to convey to purchasers of the 2.0 Brewers through the packaging and the promotional materials provided with the brewers that only Keurig brand cups would work with the 2.0 Brewer. (Id. ¶ 471.) The packaging of the 2.0 Brewer states "Works only with Keurig Brand Packs," and the user manual warns consumers that their "Keurig 2.0 brewer will not work with packs that don't have the Keurig logo," among other misrepresentations. (Id. ¶ 472.) The 2.0 Brewer itself displays the misleading message that "[t]his pack wasn't designed for this brewer" when a consumer attempts to use a Competitive Cup in it. (Rogers AC ¶ 251; see also TreeHouse AC ¶ 472.) In addition, Keurig through its websites, social media, and customer service representatives, disseminated false and misleading messaging regarding quality and safety issues with respect to Competitor Cups. (Rogers AC ¶¶ 246-47, 253; TreeHouse AC ¶ 473; DPP AC ¶¶ 199, 202-11.) Such statements caused or likely will cause consumers to mistakenly believe that only K-Cups work with 2.0 Brewers, and therefore that they have to buy higher priced K-Cups rather than Competitor Cups to use their 2.0 Brewers. (TreeHouse AC ¶ 478; DPP AC ¶¶ 218-20.) Keurig has also made misstatements to consumers about quality and safety issues with the use of non-Keurig cups in the 2.0 Brewer, (Rogers AC ¶¶ 234-37, 240-42; TreeHouse AC ¶¶ 479-92), about how use of unlicensed Compatible Cups affects the brewer warranty, (Rogers AC ¶ 238; TreeHouse AC ¶¶ 493-99; DPP AC ¶¶ 213-15), as well as misrepresentations made to both consumers and retailers about compatibility and quality issues, (Rogers AC ¶¶ 256-67; TreeHouse AC ¶¶ 501-28).

4. 2.0 Brewer

Keurig successfully implemented a plan, known as "Project Squid," to recapture market share lost to unlicensed Competitive Cup makers by designing a brewer that would only function with K-Cup and Keurig-licensed Compatible Cups. (Rogers AC ¶¶ 176-91; Treehouse AC ¶¶ 398-403; see also DPP AC ¶¶ 221-35; IPP SAC ¶¶ 136-40.) The new brewer, referred to as the "2.0 Brewer," was solely intended to further lock out competitors. (Rogers AC ¶¶ 183, 190; TreeHouse AC ¶¶ 398, 401; IPP SAC ¶ 136.)

In or about July 2012, Keurig began working on an "authentication" mechanism with Sagentia, a global product development firm, that would enable Keurig to manufacture Single Serve Brewers that provide degraded or non-functionality when used with competitors' Portion Packs. (Rogers AC ¶ 177; Treehouse AC ¶ 400.) Keurig thus developed a "taggant," a special kind of ink, which could be identified by the 2.0 Brewer's sensors to authenticate that the Portion Pack was a Keurig or Keurig-licensed pack. (Rogers AC ¶ 184; TreeHouse AC ¶ 503.) Keurig announced the 2.0 Brewer in November 2013. (Rogers AC ¶ 192.) In connection with the rollout, Keurig knowingly made false representations that its lockout technology had consumer benefits, (id. ¶¶ 214-32; TreeHouse AC ¶¶ 404-31; DPP AC ¶ 271), and disparaged all Competitor Cups, including those of Rogers and TreeHouse, to retailers, distributors, consumers, and the general public, (Rogers AC ¶¶ 233-67; TreeHouse AC ¶¶ 463-548; DPP AC ¶¶ 197-220). Although advertised as a closed system with technology that would not allow the brewer to function with non-Keurig or Keurig-licensed Portion Packs, (Rogers AC ¶ 192), some competitors have reverse-engineered 2.0 Brewer-compatible Portion Packs, (id. ¶ 47; TreeHouse AC ¶¶ 457, 465).

D. Effects of Keurig's Anti-Competitive Conduct

Keurig's anti-competitive conduct has negatively impacted competition in the Portion Pack Market, and the Compatible Cup Market. (Rogers AC ¶ 268; TreeHouse AC ¶ 549.) This has resulted in harm to manufacturers of Competitor Cups, including Rogers and TreeHouse, potential market entrants, distributors, retailers, and consumers. (Rogers AC ¶¶ 268-89; TreeHouse AC ¶¶ 551-68.)

More specifically, through its anti-competitive conduct, Keurig is able to sell its K-Cup Brewers at or below cost to create a captive base of consumers while at the same time selling its K-Cups to those consumers at supra-competitive prices. (TreeHouse AC ¶¶ 131, 196, 587; DPP AC ¶ 11; see also Rogers AC ¶ 314.) Keurig's anti-competitive conduct has thus caused consumers to pay supra-competitive prices for K-Cups. (IPP SAC ¶¶ 32-35.) In particular, Keurig's conduct has had the effect of overcharging the DPPs, who are direct purchasers of K-Cups. (Id. ¶ 30.) Direct purchasers, in turn, passed these overcharges on to the IPPs, who are end-user consumers of K-Cups, either directly or through intermediaries. (IPP SAC ¶ 30.) The IPPs claim that because the distribution channel for K-Cups "is not complex, generally involving only one or two intermediaries between Keurig and the [IPPs]," and because K-Cups are individual products that remain unaltered through the distribution chain, "the chain of commerce for this market allows for the tracing of overcharges that have passed through the chain of commerce to [IPPs]." (Id. ¶ 31.)

II. Procedural History

On February 11, 2014, TreeHouse filed a complaint against Keurig alleging antitrust and related violations. (No. 14-CV-905, Doc. 2.) Shortly thereafter, on March 13, 2014, Rogers filed its complaint in the Eastern District of California. (No. 14-CV-4242, Doc. 1.) The Rogers and TreeHouse lawsuits were two of many similar actions filed in early 2014 in federal district courts around the country alleging that Keurig engaged in unlawful anticompetitive conduct related to the 2.0 Brewer. Among those suits were numerous actions filed by individual direct purchasers and individual indirect purchasers. On March 20, 2014, the named plaintiff in one of the related cases moved the Judicial Panel on Multidistrict Litigation ("JPML") to centralize all of the cases concerning the 2.0 in a single multidistrict litigation ("MDL") in this District. (See Doc. 1.) The proposed MDL encompassed three types of actions: direct purchaser class actions, indirect purchaser class actions, and individual actions by Competitor Plaintiffs. (Id. at 1.) Although the Competitor Plaintiffs opposed centralization, (id. ), the JPML concluded that all of the related actions, including those filed by the direct purchasers and indirect purchasers, raised "virtually identical factual questions concerning the conduct of Keurig." (Id. at 2.) On June 3, 2014, pursuant to 28 U.S.C. § 1407, the JPML transferred these related actions to this District and assigned the action to me for consolidated pretrial proceedings as part of the MDL. (Id. at 3.) On May 28, 2014, I appointed interim co-lead counsel for the Named Plaintiffs and proposed direct purchaser Plaintiff class. (No. 14-CV-1609, Doc. 19.) On June 26, 2014, I appointed interim co-lead counsel for the Named Plaintiffs and proposed indirect purchaser Plaintiff class. (Doc. 36.) On July 24, 2014, the DPPs filed a Consolidated Class Action Complaint, (Doc. 65), and the IPPs filed a Consolidated Amended Indirect Purchaser Class Action Complaint, (Doc. 61).

On August 11, 2014, Rogers filed a motion seeking a preliminary injunction. (Doc. 84.) I denied the motion on September 19, 2014, finding that Rogers had not made a clear showing that it is imminently likely to suffer irreparable harm in the absence of the requested injunction. (Docs.

145, 160.) On August 5, 2014, I issued an order setting the schedule for Keurig's anticipated motions to dismiss. (Doc. 70.) In accordance with that schedule, Keurig filed motions to dismiss the four consolidated actions, (Docs. 162, 165, 168, 171), on October 6, 2014.

Rogers filed its Amended Complaint on December 8, 2014, (No. 14-CV-4242, Doc. 83), TreeHouse filed its Amended Complaint on December 2, 2014, (No. 14-CV-905, Doc. 86), the DPPs served their Amended Complaint on November 25, 2014, (No. 14-CV-1609, Doc. 42), and the IPPs served their Second Amended Complaint on November 25, 2014, (Doc. 206). Thereafter, consistent with the briefing schedule proposed by the parties, (Doc. 215), on February 2, 2015, Keurig filed its motions to dismiss (1) Rogers' Amended Complaint, (Docs. 226-28); (2) TreeHouse's Amended Complaint, (Docs. 223-25); (3) the DPPs' Amended Complaint, (Docs. 229-30), and (4) the IPPs' Second Amended Complaint, (Docs. 231-32). On April 13, 2015, Rogers filed a memorandum in opposition to Keurig's motion to dismiss, (Doc. 253), as did TreeHouse, (Doc. 254), the DPPs, (Docs. 251-52), and the IPPs, (Doc. 255). Keurig filed replies in further support of its motion to dismiss the DPPs' Amended Complaint on May 11, 2015, (Doc. 261), and in further support of its motions to dismiss the Rogers' Amended Complaint, (Docs. 265-66), the TreeHouse Amended Complaint, (Doc. 264), and the IPPs' Second Amended Complaint on May 13, 2015, (Doc. 267). The parties have also submitted various letters regarding supplemental authority. (E.g. , Docs. 276-77, 282, 284, 292, 298-99, 362-63.)

III. Legal Standard

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.' " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). A claim will have "facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. This standard demands "more than a sheer possibility that a defendant has acted unlawfully." Id. "Plausibility ... depends on a host of considerations: the full factual picture presented by the complaint, the particular cause of action and its elements, and the existence of alternative explanations so obvious that they render plaintiff's inferences unreasonable." L-7 Designs, Inc. v. Old Navy, LLC , 647 F.3d 419, 430 (2d Cir. 2011).

In considering a motion to dismiss, a court must accept as true all well-pleaded facts alleged in the complaint and must draw all reasonable inferences in the plaintiff's favor. Kassner v. 2nd Ave. Delicatessen Inc. , 496 F.3d 229, 237 (2d Cir. 2007). A complaint need not make "detailed factual allegations," but it must contain more than mere "labels and conclusions" or "a formulaic recitation of the elements of a cause of action." Iqbal , 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation marks omitted). Finally, though all allegations contained in the complaint are assumed to be true, this tenet is "inapplicable to legal conclusions." Id.

Antitrust claims in particular must be reviewed carefully at the pleading stage because false condemnation of competitive conduct threatens to "chill the very conduct the antitrust laws are designed to protect." Verizon Commc'ns Inc. v. Law Offices of Curtis V. Trinko, LLP , 540 U.S. 398, 414, 124 S.Ct. 872, 157 L.Ed.2d 823 (2004) (internal quotation marks omitted). However, "[t]here are no heightened pleading requirements for antitrust cases," Commercial Data Servers, Inc. v. Int'l Bus. Machines Corp. , No. 00CIV5008(CM)(LMS), 2002 WL 1205740, at *2 (S.D.N.Y. Mar. 15, 2002) (citing Todd v. Exxon Corp. , 275 F.3d 191, 198 (2d Cir. 2001) ), and "dismissals prior to giving the plaintiff ample opportunity for discovery should be granted very sparingly," Todd , 275 F.3d at 198 (quoting Hosp. Bldg. Co. v. Trs. of Rex Hosp. , 425 U.S. 738, 746, 96 S.Ct. 1848, 48 L.Ed.2d 338 (1976) ).

IV. Discussion

The claims brought by Rogers, TreeHouse, the DPPs, and the IPPs overlap to a significant degree, as do, in certain respects, the motions to dismiss those claims. Rogers brings seventeen causes of action pursuant to (1) the Sherman Act Section 2, 15 U.S.C. § 2 ; (2) the Sherman Act Section 1, 15 U.S.C. § 1 ; (3) the Clayton Act, 15 U.S.C. § 14 ; (4) federal patent law; (5) the Lanham Act, 15 U.S.C. § 1125(a) ; (6) common law tort; and (7) California state antitrust and consumer protection laws. (Rogers AC ¶¶ 294-414.) TreeHouse's Amended Complaint raises twenty causes of action pursuant to (1) the Sherman Act Section 2, 15 U.S.C. § 2 ; (2) the Sherman Act Section 1, 15 U.S.C. § 1 ; (3) the Clayton Act, 15 U.S.C. § 14 ; (4) federal patent law; (5) the Lanham Act, 15 U.S.C. § 1125(a) ; and (6) various state laws. (TreeHouse AC ¶¶ 569-691.) The DPPs' Amended Complaint raises six causes of action pursuant to (1) the Sherman Act Section 2, 15 U.S.C. § 2 ; (2) the Sherman Act Section 1, 15 U.S.C. § 1 ; (3) the Clayton Act, 15 U.S.C. § 14 ; and (4) common law unjust enrichment laws of the fifty states and the District of Columbia. (DPP AC ¶¶ 254-300.) The IPPs' Second Amended Complaint raises eleven causes of action pursuant to (1) the Sherman Act Section 1, 15 U.S.C. § 1 ; (2) the Sherman Act Section 2, 15 U.S.C. § 2 ; (3) the Clayton Act, 15 U.S.C. § 14 ; (4) the antitrust and unfair competition laws of twenty-one states and the District of Columbia; (5) the consumer protection and unfair trade practices laws of seven states; (6) and the common law unjust enrichment laws of seventeen states and the District of Columbia. (IPP SAC ¶¶ 225-516.)

Keurig moves to dismiss the amended complaints in their entirety with prejudice.

(See Rogers Def. Mem. 2; TreeHouse Def. Mem. 3; DPP Def. Mem. 1; IPP Def. Mem. 2.) For the sake of clarity and efficiency, where possible, I address the applicable law pertaining to the respective motions to dismiss together. Keurig also challenges the standing of the DPPs and the IPPs to raise the antitrust claims.

A. Sherman Act Section 2 Claims

Rogers, TreeHouse, and the DPPs bring four overlapping causes of action pursuant to Section 2 of the Sherman Act: (1) monopolization, (Rogers AC ¶¶ 294-303; TreeHouse AC ¶¶ 569-76; DPP AC ¶¶ 254-59); (2) exclusive dealing (Rogers AC ¶¶ 304-11; TreeHouse AC ¶¶ 577-84; DPP AC ¶¶ 260-67); (3) monopoly leveraging, (Rogers AC ¶¶ 312-17; TreeHouse AC ¶¶ 585-93; DPP AC ¶¶ 268-73); and (4) attempted monopolization in the alternative, (Rogers AC ¶¶ 377-82; TreeHouse AC ¶¶ 619-24; DPP AC ¶¶ 274-78). The IPPs bring causes of action seeking injunctive relief only for monopolization and attempted monopolization. (IPP SAC ¶¶ 277-94.) Rogers and TreeHouse bring three additional overlapping claims for: (1) sham litigation (Rogers AC ¶¶ 318-31; TreeHouse AC ¶¶ 594-602); (2) tying, (Rogers AC ¶¶ 338-53; TreeHouse AC ¶¶ 611-18); and (3) conspiracy to monopolize, (Rogers AC ¶¶ 363-69; TreeHouse AC ¶¶ 625-31). Rogers also asserts an eighth cause of action for anticompetitive product design, (Rogers AC ¶¶ 354-62), and the DPPs allege a fifth cause of action for declaratory and injunctive relief, (DPP AC ¶¶ 279-89).

Section 2 of the Sherman Act, 15 U.S.C. § 2, (" Section 2"), makes it unlawful for any person to "monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations...." 15 U.S.C. § 2. To state a Section 2 claim of monopolization, a plaintiff must allege "(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." PepsiCo, Inc. v. Coca-Cola Co. , 315 F.3d 101, 105 (2d Cir. 2002) (quoting United States v. Grinnell Corp. , 384 U.S. 563, 570-71, 86 S.Ct. 1698, 16 L.Ed.2d 778 (1966) ). To state a claim for attempted monopolization in violation of Section 2, a plaintiff must allege "(1) that the defendant has engaged in predatory or anticompetitive conduct with (2) a specific intent to monopolize and (3) a dangerous probability of achieving monopoly power." Spectrum Sports, Inc., v. McQuillan , 506 U.S. 447, 456, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993). To successfully plead a claim of conspiracy to monopolize in violation of Section 2, a plaintiff "must allege (1) concerted action, (2) overt acts in furtherance of the conspiracy, and (3) specific intent to monopolize."

Discover Fin. Servs. v. Visa U.S.A. Inc. , 598 F. Supp. 2d 394, 405 (S.D.N.Y. 2008) (quoting Elecs. Commc'ns Corp. v. Toshiba Am. Consumer Prods., Inc. , 129 F.3d 240, 246 (2d Cir. 1997) ).

Keurig raises myriad challenges to the Section 2 claims, which I analyze in turn below as related to each individual motion. However, before I reach Keurig's challenges to the Section 2 claims, I first address Keurig's challenge to the DPPs' and the IPPs' standing to raise these claims.

1. Standing

a. Applicable Law

Standing is "a threshold, pleading-stage inquiry," and a complaint that fails to allege standing must be dismissed. Gatt Commc'ns, Inc. v. PMC Assocs., L.L.C. , 711 F.3d 68, 75-76 (2d Cir. 2013) (quoting NicSand, Inc. v. 3M Co. , 507 F.3d 442, 450 (6th Cir. 2007) (en banc)). An antitrust plaintiff must establish constitutional standing under Article III as well as antitrust standing. Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters , 459 U.S. 519, 535 n.31, 103 S.Ct. 897, 74 L.Ed.2d 723 (1983) (hereinafter, " AGC "); In re DDAVP Direct Purchaser Antitrust Litig. , 585 F.3d 677, 688 (2d Cir. 2009). To plead antitrust standing, a plaintiff must allege more than just an injury causally linked to unlawful conduct. Gatt , 711 F.3d at 76. The Supreme Court has identified several factors that courts should consider in determining whether a plaintiff has antitrust standing: (1) the causal connection between the violation and the harm; (2) the presence of an improper motive; (3) the type of injury and whether it was one Congress sought to address; (4) the directness of the injury; (5) the speculative nature of the damages; and (6) the risk of duplicative recovery or complex damage apportionment. AGC , 459 U.S. at 537-44, 103 S.Ct. 897.

The Second Circuit has applied the AGC factors using a two-pronged analysis. First, a plaintiff must allege that it suffered antitrust injury. Daniel v. Am. Bd. of Emergency Med. , 428 F.3d 408, 443 (2d Cir. 2005). Second, the plaintiff must demonstrate that it meets the "efficient enforcer" factors that make it a "proper antitrust plaintiff." Id.

To establish antitrust injury, a plaintiff must allege facts showing that it suffered "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful." Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc. , 429 U.S. 477, 489, 97 S.Ct. 690, 50 L.Ed.2d 701 (1977). Courts in this circuit employ a three-step analysis to determine whether a plaintiff has plausibly alleged antitrust injury. Gatt , 711 F.3d at 76. First, the plaintiff must identify the practice complained of and the reasons the practice is or might be anticompetitive. Id. Second, the court must identify the actual injury alleged by the plaintiff. Id. Third, the court must compare the anticompetitive effect of the practice at issue to the actual injury alleged by the plaintiff. Id.

It is not enough for a plaintiff to allege that it has suffered antitrust injury. It must also establish that it is an "efficient enforcer" of the antitrust laws. The four "efficient enforcer" factors require the court to consider:

(1) the directness or indirectness of the asserted injury; (2) the existence of an identifiable class of persons whose self-interest would normally motivate them to vindicate the public interest in antitrust enforcement; (3) the speculativeness of the alleged injury; and (4) the difficulty of identifying damages and apportioning them among direct and indirect victims so as to avoid duplicative recoveries.

In re DDAVP , 585 F.3d at 688 (quoting Volvo N. Am. Corp. v. Men's Int'l Prof'l Tennis Council , 857 F.2d 55, 66 (2d Cir. 1988) ).

Plaintiffs must demonstrate antitrust standing whether they seek monetary or injunctive relief. Paycom Billing Servs., Inc. v. Mastercard Int'l, Inc. , 467 F.3d 283, 290 (2d Cir. 2006). "The extent to which [the efficient enforcer] factors apply when plaintiffs sue for injunctive relief depends on the circumstances of the case." Daniel , 428 F.3d at 443 ; see also Cargill, Inc. v. Monfort of Colo., Inc. , 479 U.S. 104, 111 n.6, 107 S.Ct. 484, 93 L.Ed.2d 427 (1986) ("Thus, because standing under § 16 raises no threat of multiple lawsuits or duplicative recoveries, some of the factors other than antitrust injury that are appropriate to a determination of standing under § 4 are not relevant under § 16."); Freedom Holdings, Inc. v. Cuomo , 624 F.3d 38, 52 (2d Cir. 2010) ("In the antitrust context, courts have articulated several 'efficient enforcer' factors to avoid the 'duplicative recoveries' that would result from allowing 'every person tangentially affected by an antitrust violation' to sue for treble damages.") (quoting Blue Shield of Va. v. McCready, 457 U.S. 465, 475-77 & n.11, 102 S.Ct. 2540, 73 L.Ed.2d 149 (1982) ). Because "one injunction is as effective as 100, and, concomitantly, ... 100 injunctions are no more effective than one," Hawaii v. Standard Oil Co. , 405 U.S. 251, 261, 92 S.Ct. 885, 31 L.Ed.2d 184 (1972), some of these factors are "not relevant" in suits for injunctive relief, Cargill , 479 U.S. at 111 n.6, 107 S.Ct. 484. Although the efficient enforcer factors related to damages may not be directly relevant to an action for injunctive relief, the principles underlying those factors still inform the analysis. As District Court Judge Katherine Forrest articulated when applying the AGC factors to dismiss a claim by a class of indirect purchasers seeking injunctive relief in an antitrust case:

In this regard, issues with complex and speculative damages concern the fact and nature of harm (that is, damage) as much as a calculation of dollars and cents. Is determining the fact of damage complex? Does remedying plaintiff's injury through injunctive relief present complex issues?

Similarly, to assess the potential for duplicative recovery, the Court must reasonably ask not only whether there is another plaintiff who will recover a quantum that would account for monetary damage, but also whether the relief one plaintiff seeks more generally (such as injunctive relief), is being adequately pursued by another, better situated-party. Thus, the AGC factors are reasonably applicable to actions in which only injunctive relief is sought. Finally, in all cases the court is cautioned to be mindful the manageability of litigation. That is, allowing actions to proceed in which plaintiffs seek overlapping relief and in which their presence provides no additional benefit may well add to manageability issues.

In re Aluminum Warehousing Antitrust Litig. , No. 13-md-2481 (KBF), 2014 WL 4277510, at *17-18 (S.D.N.Y. Aug. 29, 2014), supplemented , 2014 WL 4743425 (S.D.N.Y. Sept. 15, 2014), aff'd , 833 F.3d 151 (2d Cir. 2016).

b. Application to DPPs

Here, the DPPs are direct purchasers of the defendant's product, the K-Cups, and allege that Keurig's anticompetitive conduct caused them to pay supra-competitive prices. (DPP AC ¶¶ 5-6, 23-24.) Such an injury plainly is "of the type the antitrust laws were intended to prevent." Brunswick Corp. , 429 U.S. at 489, 97 S.Ct. 690. Although the conduct of which the DPPs complain largely targeted Keurig's direct competitors, such as TreeHouse and Rogers, the DPPs' alleged injury of overcharge was "inextricably intertwined" with the conduct's anti-competitive effects and thus "flow[ed] from that which makes defendants' acts unlawful." McCready , 457 U.S. at 484, 102 S.Ct. 2540 (internal quotation marks omitted). The DPPs have therefore pled antitrust injury.

With regard to the "efficient enforcer" factors that bear on whether the DPPs are "proper" antitrust plaintiffs, each factor supports the DPPs' antitrust standing. With regard to the directness of the injury, Keurig argues, citing to specific allegations of Keurig's anticompetitive scheme aimed at its competitors, that the claims of harm are "attenuated." (DPP Def. Mem. 5-6.) Keurig's focus on the allegations related to the scheme is misplaced and misstates the DPPs' alleged harm: the payment of supra-competitive prices, set by Keurig, for K-Cups bought directly from Keurig or its agents. (DPP AC ¶¶ 245, 258.) As an initial matter, the DPPs' injury-like the direct purchaser plaintiffs in DDAVP -was that they were forced to pay "supra-competitive prices as a result of defendants' anticompetitive conduct" thereby preventing the competitive market entry of others and the lower prices that would have resulted for the direct purchasers. In re DDAVP , 585 F.3d at 688. The defendants in DDAVP -like Keurig here-argued that anticompetitive conduct targeted defendants' competitors and therefore the harm to the direct purchaser plaintiffs was too far removed. The Second Circuit rejected that argument. As was the case with the direct purchaser plaintiffs in DDAVP , even though the injuries to the DPPs were "derivative of the direct harm experienced by the defendants' competitors, harming competitors was simply a means for the defendants to charge the plaintiffs higher prices." Id. The directness of the injury to DDPs-the payment of supra-competitive prices-supports the DPPs' antitrust standing.

As to the second factor, motivation and alternative enforcers, Keurig argues that TreeHouse and Rogers have filed lawsuits and are motivated to vindicate the public interest in antitrust enforcement. (DPP Def. Mem. 6.) Here, Keurig attempts to argue that TreeHouse and Rogers are more motivated than the DPPs and that, therefore, the DPPs should not enjoy antitrust standing. This misstates the law; the issue is not what plaintiff is the most motivated. "The second factor simply looks for a class of persons naturally motivated to enforce the antitrust laws.... Even if the competitors might be the most motivated, the plaintiffs are also significantly motivated due to their 'natural economic self-interest' in paying the lowest price possible." In re DDAVP , 585 F.3d at 689 (citing Daniel , 428 F.3d at 444 ). Moreover, because TreeHouse and Rogers are seeking lost profits while the DPPs are seeking overcharges, "[d]enying the plaintiffs a remedy in favor of a suit by competitors would thus be 'likely to leave a significant antitrust violation undetected or unremedied.' " Id. (quoting AGC , 459 U.S. at 542, 103 S.Ct. 897 ). The DPPs are motivated enforcers, and therefore this factor supports their antitrust standing.

Keurig argues further that the third and fourth factors, speculative nature of injury and difficulty of apportionment, weigh against the DPPs' standing because "[t]he injury DPPs allege is highly speculative, with alleged damages that would be nearly impossible to determine." (DPP Def. Mem. 7.) However, I find that the nature of the alleged injury-the overpayment for K-Cups purchased directly from Keurig or its agents-is not speculative. With regard to apportionment, lost profits-sought by Keurig's competitors-are separate from the overcharges the DPPs seek to recover. However, "[e]ven assuming some overlap between lost profits and overcharges ..., the two are conceptually different measures that we think can be fairly apportioned in order to avoid duplicative recoveries." In re DDAVP , 585 F.3d at 689. These factors also weigh in favor of the DPPs' standing.

Therefore, all four efficient enforcer factors support the DPPs antitrust standing.

c. Application to the IPPs

Although the IPPs assert only a claim for injunctive relief under the federal antitrust laws, they must still demonstrate antitrust standing to assert such a claim. Paycom , 467 F.3d at 290 (holding that private antitrust plaintiffs must demonstrate antitrust standing whether they seek monetary or injunctive relief). Unlike the DPPs, the IPPs fail to sufficiently allege that they are efficient enforcers, and therefore, they lack antitrust standing.

First, the IPPs' alleged injury is, by definition, indirect. The IPPs allege that they were "end-user[s]" who purchased Keurig K-Cups through distribution channels "generally involving only one or two intermediaries" between the IPPs and Keurig. (IPP SAC ¶ 28.) They do not allege that Keurig directly overcharged them, but rather that one or more intermediaries passed on overcharges to the IPPs. The Supreme Court clearly admonished the use of pass-on theories to establish standing in treble damages actions, in part due to the concern that "the massive evidence and complicated theories" involved in tracing the effect of an overcharge through the distribution chain would impose "burdens ... on the effective enforcement of the antitrust laws." Ill. Brick Co. v. Illinois , 431 U.S. 720, 741, 97 S.Ct. 2061, 52 L.Ed.2d 707 (1977) (internal quotation marks omitted). That concern is no less present in the context of an action for an injunction, as the question of whether a party several levels down in the distribution chain suffered an injury at all may be as complicated and indeed intertwined with quantifying the damages associated with the injury.

Second, there are alternative enforcers that are better situated to bring suit, and have brought suit. The DPPs in particular seek injunctive relief that largely, if not completely, overlaps with the injunctive relief sought by the IPPs. (Compare DPP AC ¶ 302(f)-(h), with IPP SAC at 116.) Given the claims brought by the DPPs and the Competitor Plaintiffs, denying the IPPs' federal claims is not "likely to leave a significant antitrust violation undetected or unremedied." AGC , 459 U.S. at 542, 103 S.Ct. 897. Although it is true that an efficient enforcer need not be the "most motivated" enforcer, In re DDAVP , 585 F.3d at 689, the existence of the DPPs and the Competitor Plaintiffs "diminishes the justification for allowing a more remote party ... to perform the office of a private attorney general," AGC , 459 U.S. at 542, 103 S.Ct. 897. This factor, therefore, weighs against a finding of antitrust standing.

Third, and related to the directness inquiry, the IPPs' alleged injury is speculative "because the claimed damages are too indirect and may have been produced by factors independent from any alleged overcharge." In re Lithium Ion Batteries Antitrust Litig. , No. 13-MD-2420 YGR, 2014 WL 4955377, at *15 (C.D. Cal. Oct. 2, 2014). The IPP Second Amended Complaint alleges that "[t]he distribution channel for Keurig K-Cups is not complex, generally involving only one or two intermediaries between Keurig and the end-user consumer Plaintiffs," (IPP SAC ¶ 28), and that "Keurig's anticompetitive conduct resulted in direct purchasers being overcharged for Keurig K-Cups, and such overcharges were passed on by direct purchasers to Plaintiffs and the members of the Classes in whole or in part," (id. ¶ 30). These conclusory allegations fail to describe with sufficient factual detail the chain of distribution between Keurig and the IPPs, leaving numerous questions unanswered. Who were the intermediaries? How often was there one intermediary versus two or more? How does one know to what extent, if at all, any of the intermediaries passed on the overcharges to the next link in the chain? The IPPs' Second Amended Complaint sheds no light on any of these questions, and thus, this factor weighs against a finding of antitrust standing. See In re Aluminum Warehousing Antitrust Litig. , 2014 WL 4277510, at *22 (dismissing claims when "plaintiffs [were] one or more levels down the supply/distribution chain").

The IPPs emphasize that they "purchased the exact product sold by Keurig," but just not directly from Keurig. (IPP Def. Mem. 11-12.) However, the fact that the product did not change as it flowed down the line of distribution does not preclude the possibility that independent factors, such as costs for transportation, handling, storage, or any other service-rather than overcharges passed down from Keurig-could have led to the IPPs' purported damages. The vague allegation that "[t]he distribution channel for Keurig K-Cups is not complex," (IPP SAC ¶ 28), does not cure the speculative nature of the alleged harm. Moreover, if the allegation is accurate the IPPs should have provided the details of the distribution channel-including its length-with more specificity since the IPPs have had ample opportunities to do so.

Finally, while the difficulty in apportioning damages would not hinder a finding of antitrust standing in this action for injunctive relief, the IPPs do request relief that is largely duplicative of the relief requested by the DPPs, as discussed above. The IPPs' "roles as plaintiffs thus compounds manageability issues without providing any clear benefit." In re Aluminum Warehousing Antitrust Litig. , 2014 WL 4277510, at *23.

Because each of the efficient enforcer factors weighs against the IPPs' federal antitrust standing, their federal antitrust claims are dismissed. The DPPs, however, adequately pled antitrust standing. As such, I will move on to address Keurig's remaining challenges to the federal antitrust claims of Rogers, TreeHouse, and the DPPs.

2. Monopoly Power

a. Applicable Law

Turning to the first prong of a Section 2 claim, "to make out an antitrust claim, '[a] plaintiff must allege a relevant product market in which the anti-competitive effects of the challenged activity can be assessed.' " Commercial Data Servers , 2002 WL 1205740, at *4 (quoting Carell v. The Shubert Org., Inc. , 104 F. Supp. 2d 236, 264 (S.D.N.Y. 2000) ). Monopoly power is the power to control prices or exclude competition in a given market. Grinnell , 384 U.S. at 571, 86 S.Ct. 1698. It can be pled directly through allegations of control over prices or the exclusion of competition, or it may be inferred from a defendant's large share of the relevant market. Geneva Pharms. Tech. Corp. v. Barr Labs. Inc. , 386 F.3d 485, 500 (2d Cir. 2004). A plaintiff pleading monopolization, or attempted monopolization, generally must define the relevant market, because "without a definition of that market there is no way to measure the defendant's ability to lessen or destroy competition." Spectrum Sports , 506 U.S. at 455-56, 113 S.Ct. 884 (quoting Walker Process Equip., Inc. v. Food Mach. & Chem. Corp. , 382 U.S. 172, 177, 86 S.Ct. 347, 15 L.Ed.2d 247 (1965) ). It is important to recognize that, "[b]ecause market definition is a deeply fact-intensive inquiry, courts hesitate to grant motions to dismiss for failure to plead a relevant product market." Todd , 275 F.3d at 199-200 (citing Found. for Interior Design Educ. Research v. Savannah Coll. of Art & Design , 244 F.3d 521, 531 (6th Cir. 2001) ("Market definition is a highly fact-based analysis that generally requires discovery.")).

b. Application to the Competitor Plaintiffs and the DPPs

Keurig attacks the Section 2 claims of Rogers, TreeHouse, and the DPPs by arguing that they failed to allege monopoly power in a properly defined relevant market. (Rogers Def. Mem. 16-22; TreeHouse Def. Mem. 27-32; DPP Def. Mem. 18-24.) Rogers, TreeHouse, and the DPPs allege two separate relevant product markets in which Keurig's anticompetitive conduct arose: (1) the Single Serve Brewer Market; and (2) the Compatible Cup Market. (Rogers AC ¶ 17; TreeHouse AC ¶ 64; DPP AC ¶ 53.) The Competitor Plaintiffs also allege the Portion Pack Market as a third relevant product market. (Rogers AC ¶ 17; TreeHouse AC ¶ 64.)

i. Single Serve Brewers Market

Keurig attacks Plaintiffs' Single Serve Brewers Markets in several ways. First, with respect to Rogers' market-which it defines as the market for the design, manufacture, and sale of "pressurized hot water brewing equipment that is capable of brewing at least a single serving of coffee or other hot beverages," (Rogers AC ¶¶ 9, 17)-Keurig argues that Rogers does not define what "pressurized" means and, because "[a]ny brewer can brew 'at least one serving,' ... [Rogers is] gerrymandering a market definition to suit its case," (Rogers Def. Mem. 16). However, as Rogers alleges, Keurig itself defines "competing systems" as Rogers does in defining Single Serve Brewers. Specifically, Keurig's licensing agreements describe "competing systems" as having the following characteristics: (1) "A brewing chamber designed to be pierced during the brewing process to allow hot water in and the brewed beverage out;" and (2) "[a] pressurized brewing process that takes place at pressures less than 30 psi inside the brewing chamber." (Rogers AC ¶ 13). Further, in these agreements, Keurig clarifies that it does not compete with "hopper-based single-cup coffee systems" and "espresso pod-based systems," (id. ¶ 14), let alone standard drip brew coffee systems. In this vein, Rogers has sufficiently pled a market for Single Serve Brewers. See Todd , 275 F.3d at 199-200.

Second, Keurig attempts to attack the market definition alleged by Rogers, TreeHouse, and the DPPs by highlighting their allegations that Keurig sells its Single Serve Brewers at or below cost, (Rogers Def. Mem. 16 (citing Rogers AC ¶ 314); see also TreeHouse Def. Mem. 27-28; DPP Def. Mem. 19 (citing DPP AC ¶ 193)), and arguing that "[n]o firm would price at or below cost unless it faced competition," (Rogers Def. Mem. 16 (citing Dennis W. Carlton & Jeffrey M. Perloff, Modern Industrial Organization 88 (4th ed. 2005) ("A monopolist ... sets a price above marginal cost.")); see also DPP Def. Mem. 19). Keurig cites no case law, and I am aware of none, in which a court has found that a monopolist charging at or below cost forecloses Section 2 claims as a matter of law. Indeed, Keurig cites in support of its proposition Berkey Photo, Inc. v. Eastman Kodak Co. , 603 F.2d 263 (2d Cir. 1979), in which the court notes that "the differential between price and marginal cost is used as an indication of the degree of monopoly power," id. at 275 n.12, but immediately goes on to note that "high prices, far from damaging competition, invite new competitors into the monopolized market," id.

It is clear that, when there are allegations of monopolization of a tied market, a monopolist might in fact charge at or below cost for the tying product to extract monopoly surplus from the tied product. Monopolists may "evade price control in the tying product through clandestine transfer of the profit to the tied product." Eastman Kodak Co. v. Image Tech. Servs., Inc. , 504 U.S. 451, 487, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992) (Scalia, J., dissenting) (quoting Fortner Enters., Inc. v. U.S. Steel Corp. , 394 U.S. 495, 513-14, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969) (White, J., dissenting)); see Berkey Photo , 603 F.2d at 272 ("It is not a defense to liability under § 2 that monopoly power has not been used to charge more than a competitive price...."); Xerox Corp. v. Media Scis., Inc. , 660 F. Supp. 2d 535, 539 (S.D.N.Y. 2009) (denying dismissal where sales were "at a low margin or a loss, hoping to earn a profit through later [aftermarket] sales") (" Xerox III "); see also Rogers AC ¶¶ 131, 195-209; TreeHouse AC ¶¶ 131, 195-209, 587; DPP AC ¶ 192 ("Keurig's business model depends upon its ability to leverage its Single-Serve Brewer monopoly in order to restrain competition and extract monopoly profits from the K-Cups it sells in the Compatible Cup Market."). In sum, pricing Single Serve Brewers at or below cost in no manner suggests that the Single Serve Brewer Market is somehow broader than defined, or that Keurig does not in fact enjoy monopoly power in that market.

Third, the DPPs allege a Single Serve Brewers Market that is distinct from traditional coffee in that it is more convenient and efficient. Keurig argues that the DPPs' market definition fails because "a difference in process or convenience does not create a plausible inference that end products do not compete." (DPP Def. Mem. 19.) However, the DPPs do not simply allege a difference in process but describe a difference in fact-the DPP Amended Complaint details why traditional drip coffee machines are not interchangeable with and do not compete with Single Serve Brewers. (See DPP AC ¶¶ 55-58.) Further, Keurig's recitation of the law misses the mark because courts have found that functionality and consumer perspective is an important part of a market evaluation. See In re Payment Card Interchange Fee & Merch. Disc. Antitrust Litig. , 562 F. Supp. 2d 392, 399 (E.D.N.Y. 2008) ("The contours of the relevant market track the cross-elasticity of demand: the extent to which products or services are perceived by consumers to be reasonably interchangeable for the same purposes.... The cross-elasticity of demand analysis depends on information about consumer behavior and perceptions and is accordingly 'a deeply fact-intensive inquiry.' " (quoting Todd , 275 F.3d at 199 )).

Therefore, at this stage, Plaintiffs' plausibly allege a market covering Single Serve Brewers. For example, the Rogers Amended Complaint alleges that Keurig "controls approximately 89% of total unit sales and 93% of total dollar sales in the Single Serve Brewer Market." (Rogers AC ¶ 27.) Similarly, the TreeHouse Amended Complaint alleges that Keurig "controls approximately 93% of the Single-Serve Brewer Market." (TreeHouse AC ¶¶ 83, 87-88, 90-94.) The DPPs, in turn, allege that during the entire relevant time period, Keurig has dominated the Single-Serve Brewer market with at least 88% market share. (DPP AC ¶¶ 9, 75, 101.) These allegations support an inference of a "substantial monopoly" and monopoly power. See Grinnell , 384 U.S. at 571, 86 S.Ct. 1698 (87% is a "substantial monopoly"); Am. Tobacco Co. v. United States , 328 U.S. 781, 797, 66 S.Ct. 1125, 90 L.Ed. 1575 (1946) ("over 80%" constitutes "a substantial monopoly"). Indeed, while unnecessary, see Geneva Pharms. , 386 F.3d at 500 ("Monopoly power ... can be proven directly through evidence of control over prices or the exclusion of competition, or it may be inferred from a firm's large percentage share of the relevant market."), the Competitor Plaintiffs go on to allege that Keurig has exercised this monopoly power to restrain competition in the Single Serve Brewer Market, (see Rogers AC ¶ 30; TreeHouse AC ¶ 89).

ii. Compatible Cup and Portion Pack Markets

Keurig also challenges the Plaintiffs' allegations of Keurig's monopoly power in the Compatible Cup and Portion Pack Markets and, relatedly, the Competitor Plaintiffs' allegations of a Portion Pack Market. In particular, Rogers alleges that, after taking steps to regain market share it lost to market entrants, as of November 2014, Keurig controls approximately 95% of the Compatible Cup Market. (Rogers AC ¶ 46