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July 24, 2014

Fourth Circuit Affirms Dismissal of Antitrust Claims Against Data Transfer Provider

The US Court of Appeals for the Fourth Circuit affirmed the holding of the lower court, which granted GXS, Inc.’s motion to dismiss plaintiff Loren Data Corporation’s antitrust claims against GXS. Both parties provide electronic data interchange services, which involves the transfer and exchange of business data from one computer system to another.

Over the last ten years, Loren Data repeatedly sought a “peer interconnect” data transfer arrangement from GXS (in which each network provider would bear its own cost for data transfers). GXS refused Loren Data’s requests, leading the latter to allege that such refusal constituted a violation of Sections 1 and 2 of the Sherman Antitrust Act. To state a claim under Section 1 of the Sherman Act, a plaintiff must show that a defendant entered into a “contract, combination, or conspiracy” that caused an unreasonable restraint of trade. The Fourth Circuit affirmed the lower court’s dismissal of the Section 1 claim because Loren Data had not adequately pled such a conspiracy or restraint of trade, but only that GXS was unwilling to contract with Loren Data based on Loren Data’s terms. To plead a Section 2 claim, a plaintiff must allege that a defendant has willfully acquired or maintained monopoly power in a relevant market.

Loren Data’s Section 2 claims against GXS failed because Loren Data failed to demonstrate that GXS had a specific intent to monopolize. Instead, Loren Data’s allegations established that GXS regularly granted peer interconnects to other network providers, which the court found to be “entirely inconsistent with an intent to monopolize.”


Loren Data Corp. v. GXS, Inc., No. 11-2602 (Dec. 26, 2012).

©2014 Katten Muchin Rosenman LLP

About the Author

Michael S. Gordon, Katten Muchin Law Firm, Litigation Attorney
Partner

Michael S. Gordon has a broad range of commercial litigation experience, and regularly represents clients in state and federal courts, as well as in arbitration and mediation proceedings, in New York, New Jersey and throughout the United States. Mr. Gordon has substantial experience in real estate and secured lending litigation, representing developers, management and hospitality companies, banks and private equity funds. Mr. Gordon also has extensive experience handling all types of business disputes including breach of contract, business torts, partnership and corporate shareholder...

212-940-6666

About the Author

Allison Wuertz, Securities Litigation Attorney, Katten Muchin Law firm
Associate

Allison Wuertz concentrates her practice in litigation and dispute resolution matters.

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