Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 1 of 28 PageID #:1
UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS
THE BON-TON STORES, INC., on behalf of itself and all others similarly situated,
Plaintiff, Civil Action No. ______v.
SINCLAIR BROADCAST GROUP, INC.; DEMAND FOR JURY TRIAL TRIBUNE MEDIA COMPANY; and JOHN DOES 1-5,
Defendants.
CLASS ACTION COMPLAINT
Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 2 of 28 PageID #:2
TABLE OF CONTENTS
I. NATURE OF THE ACTION ...... 1
II. THE PARTIES...... 2
A. PLAINTIFF...... 2
B. DEFENDANTS ...... 3
III. JURISDICTION AND VENUE ...... 4
IV. FACTUAL BACKGROUND ...... 5
A. THE LOCAL TELEVISION INDUSTRY ...... 5
B. MARKET CONCENTRATION FOR BROADCAST TELEVISION ...... 8
C. LOCAL TELEVISION ADVERTISING ...... 10
1. Superiority of the broadcast television advertising platform ...... 10
2. National versus local advertising ...... 11
3. Role of Nielsen ratings in the spot advertising market ...... 12
4. Pricing of local television spot advertisements ...... 12
5. Role of advertising agencies and “rep firms” ...... 13
D. UNLAWFUL PRICE FIXING CONSPIRACY AND DEPARTMENT OF JUSTICE INVESTIGATION ...... 15
V. EFFECTS OF THE SCHEME ON COMPETITION AND ANTITRUST INJURY TO PLAINTIFF AND MEMBERS OF THE CLASS ...... 17
VI. RELEVANT MARKETS ...... 18
VII. BARRIERS TO ENTRY ...... 18
VIII. EFFECTS ON INTERSTATE COMMERCE ...... 19
IX. CLASS ACTION ALLEGATIONS ...... 19
X. PLAINTIFF’S CLAIMS ARE TIMELY ...... 22
A. Defendants Have Engaged in a Continuing Violation ...... 22
i Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 3 of 28 PageID #:3
B. Fraudulent Concealment Tolled the Statute of Limitations ...... 22
XI. CLAIM FOR RELIEF ...... 23
Violation of Section 1 of the Sherman Act, 15 U.S.C. § 1 ...... 23
XII. DEMAND FOR JUDGMENT ...... 24
XIII. JURY DEMAND ...... 24
ii Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 4 of 28 PageID #:4
Plaintiff The Bon-Ton Stores, Inc. (“Plaintiff”) brings this class action, on behalf of itself
and all others similarly situated, for claims under Section 1 of the Sherman Act, 15 U.S.C. § 1, to
recover damages and obtain injunctive relief for injuries caused by Defendants Tribune Media
Company (“Tribune”), Sinclair Broadcast Group, Inc. (“Sinclair”), and John Does 1-5
(collectively, “Defendants”). The allegations herein are based on Plaintiff’s personal knowledge as to its own acts and on information and belief as to all other matters. This investigation includes interviews of Defendants’ former employees with direct knowledge of the matters alleged herein, consultation with numerous media and advertising industry experts and professionals, in-depth industry research, and a thorough review of publicly available information. On behalf of itself and the Class it seeks to represent (as defined below), Plaintiff alleges as follows:
I. NATURE OF THE ACTION
1. Plaintiff’s claim stems from a price-fixing conspiracy among Defendants to fix,
raise, maintain, and/or stabilize the prices of local television advertising time (referred to as local
“spots”). Defendants are competitors in the market for local spot television advertising. In a
competitive market, Defendants typically would aggressively compete on price to win business.
Instead, Defendants conspired to reduce or eliminate competition by sharing information and
coordinating pricing in various Designated Market Areas (“DMAs”), resulting in artificially
inflated prices for local spot advertising in violation of federal antitrust laws.
2. The Department of Justice’s Antitrust Division (“DOJ”) is actively investigating
Defendants’ conduct after its recent review of the now-defunct merger between Sinclair and
Tribune. During the merger, Defendants produced significant quantities of documents and other materials. Following its review of those materials, DOJ began investigating illegal anticompetitive conduct in the form of price-fixing.
1 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 5 of 28 PageID #:5
3. Sinclair and Tribune are dominant owners of local television stations in the
United States: Sinclair owns a whopping 192 local stations, and Tribune owns 42. There are
presently 14 DMAs in which their ownership overlaps (the “Overlapping DMAs”), as detailed
below. Accordingly, this Complaint focuses on the anticompetitive impact in those DMAs.
4. Similar anticompetitive conduct may be uncovered in additional DMAs through
counsel’s ongoing investigation. For this reason, the alleged conduct could conceivably affect a
significant percentage of DMAs across the country.
5. Each of the Overlapping DMAs also includes at least one additional local station
not owned and operated by a national broadcast network. Other local station owners likely also
participated in the unlawful price-fixing conspiracy. Additional defendants (other local station
owners in these 14 DMAs and/or others) will therefore likely be added to this Complaint as
additional information comes to light through counsel’s ongoing investigation. These yet-to-be
identified companies are referred to as John Does 1 through 5.
6. Defendants’ price fixing is a per se unlawful restraint of trade that violates
Section 1 of the Sherman Act, 15 U.S.C. § 1. Plaintiff, on its own behalf and on behalf of the other Class members, seeks to recover treble the damages resulting from their payment of the illegally inflated local television spot pricing. Plaintiff further seeks to enjoin Defendants from repeating or engaging in their unlawful conduct.
II. THE PARTIES
A. PLAINTIFF
7. Plaintiff The Bon-Ton Stores, Inc. is a Pennsylvania corporation with its principal place of business in York, Pennsylvania. Plaintiff, through its subsidiaries The Bon-Ton
Department Stores, Inc., McRIL, LLC, Carson Pirie Scott II, Inc., BonTon Distribution, Inc., and
The Bon-Ton Stores of Lancaster, Inc., operated approximately 270 retail stores across the
2 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 6 of 28 PageID #:6
United States during the relevant time period under the brand names Bon-Ton, Bergner’s, Boston
Store, Carson’s, Elder-Beerman, Herberger’s, Carson Pirie Scott, and Younkers.
8. As part of its extensive retail business, Plaintiff purchased over $89.4 million in local advertising time from 2014 through 2018. A significant portion of those purchases were local television spots, including spots on Defendants’ stations. Indeed, Plaintiff has spent millions of dollars on local advertising spots in the Overlapping DMAs from 2014 to 2018.
9. As demonstrated throughout this Complaint, Plaintiff was forced to pay supracompetitive prices for local advertising spots and was therefore injured in its business or property as a result of Defendants’ unlawful conduct.
B. DEFENDANTS
10. Defendant Sinclair Broadcast Group, Inc. is a Maryland corporation with its principal executive offices located in Hunt Valley, Maryland. Sinclair owns 192 stations in 89 markets, the largest number of local television stations of any broadcast company in the United
States. It also owns and operates Tennis Channel, Tennis Magazine, and Tennis.com, along with digital media products and technical services companies that supply and maintain broadcast transmission systems. It distributes original programming, local news, and programming provided by third-party networks and syndicators.
11. Defendant Tribune Media Company is a Delaware corporation with its principal executive offices located in Chicago, Illinois. Tribune Media Company is a media company with a diverse portfolio of television and digital properties, including 42 local television stations in 33 markets. It also owns WGN America, Antenna TV, Tribune Studios, WGN-Radio, and a minority stake in the TV Food Network.
12. John Doe Defendants 1 through 5 are entities, including other local television station owners, whose identities are currently unknown to Plaintiff. During the Class Period, the
3 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 7 of 28 PageID #:7
John Doe Defendants participated in and furthered the price fixing conspiracy. Plaintiff’s counsel
continue to conduct an investigation to identify these additional Defendants.
13. Defendants’ actions described in this Complaint are part of, and in furtherance of,
the unlawful conduct alleged below, and were authorized, ordered, or done by Defendants’
various officers, agents, employees, or other representatives while actively engaged in the
management of Defendants’ affairs (or that of their predecessors-in-interest) within the course and scope of their duties and employment, or with the actual, apparent, or ostensible authority of
Defendants.
III. JURISDICTION AND VENUE
14. This Court has subject matter jurisdiction over this action pursuant to Sections 4 and 16 of the Clayton Act (15 U.S.C. §§ 15(a) and 26) and 28 U.S.C. §§ 1331 and 1337(a).
15. Venue is appropriate within this district under 15 U.S.C. § 15(a) (Clayton Act), 15
U.S.C. § 22 (venue for antitrust matters), and 28 U.S.C. § 1391(b) (general venue provision).
Defendants resided, transacted business, were found, or had agents within this District, and a
portion of the affected interstate trade and commerce discussed below was carried out in this
District. Defendants’ conduct, as described in this Complaint, was within the flow of, was
intended to, and did have a substantial effect on, the interstate commerce of the United States,
including in this District.
16. The Court has personal jurisdiction over each Defendant. Each Defendant has
transacted business, maintained substantial contacts, and/or committed overt acts in furtherance
of the illegal scheme and conspiracy throughout the United States, including in this District. The
scheme and conspiracy have been directed at, and have had the intended effect of, causing injury
to persons residing in, located in, or doing business throughout the United States, including in
this District.
4 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 8 of 28 PageID #:8
IV. FACTUAL BACKGROUND
A. THE LOCAL TELEVISION INDUSTRY
17. The television industry is an intricate marketplace of national and local television stations, subject to a regulatory scheme developed and enforced by the Federal Communications
Commission (the “FCC”).
18. Within that marketplace, there are two core categories of television stations: broadcast networks (over-the-air stations with free programming accessible by anyone with the right antenna access) and cable networks (subscription channels typically offered as part of a monthly subscription bundle to customers, such as HGTV and ESPN).
19. For decades, the “Big Three” national broadcast networks—ABC, CBS, and
NBC—dominated the television landscape. Over time, however, the core group of national broadcast networks expanded to include Fox and is now often referred to in the industry as the
“Big Four” or the “Big Three plus Fox.” Other national broadcast networks have also grown in popularity in recent decades, including The CW and MeTV.
20. While certain cable networks have surged in popularity for particular demographics, broadcast networks remain the most-viewed stations given their free access and their inclusion in every cable subscription package. Unlike costly cable station subscriptions, broadcast networks can be accessed by virtually anyone with a television.
21. Within this marketplace, hundreds of local broadcast stations operate in regional markets referred to as designated market areas (“DMAs”). Many of these local stations are affiliated with a national broadcast network such as ABC, CBS, NBC, or Fox. The Big Four’s local stations wield particularly significant control over television watchers across the country.
According to recent statistics, approximately 23 million viewers watch the local evening news,
5 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 9 of 28 PageID #:9
while just three million tune in to the top three cable news networks (CNN, Fox News, and
MSNBC).1
22. The Nielsen Company, the leading firm that surveys and measures television
viewership, segments the country into 210 separately tracked DMAs (simply collections of
counties in a geographic area). These 210 Nielsen DMAs are widely accepted by television
stations, advertisers, and advertising agencies as the de facto geographic area by which to evaluate audience size and demographics. For each DMA, Nielsen measures the total number of homes with televisions, along with its corresponding percentage of the entire United States market.
23. Local broadcast stations operate in each DMA and provide both local coverage and content produced by national broadcast networks. The local stations may be affiliated with one of the Big Four national broadcast networks or one of the smaller broadcast networks.
24. For example, the St. Louis DMA includes the following stations: KDNL-TV (a
Sinclair-owned ABC affiliate), KTVI (a Tribune-owned Fox affiliate), KPLR-TV (a Tribune- owned CW affiliate), KMOV (a CBS affiliate), and KSDK (an NBC affiliate). These local stations air regional St. Louis news coverage and other local programming content but also broadcast national content produced by ABC, CBS, NBC, or Fox. In addition, the St. Louis
DMA includes WRBU (an Ion local affiliate) and KNLC (a MeTV owned-and-operated station).
25. In most DMAs, local broadcast stations are owned by national companies, including Defendants. In several DMAs, though, local broadcast stations are owned directly by a
1 The Imminent Conservative Takeover of Local TV News, Explained, available at https://www.vox.com/2017/5/15/15598270/sinclair-broadcast-imminent-conservative-takeover-of-local- tv-news-explained (May 15, 2017).
6 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 10 of 28 PageID #:10
national broadcast network and are referred to by industry insiders as “owned and operated” or
“O&Os.” For example, Fox owns its local affiliate in the Washington, DC DMA.
26. Sinclair and Tribune stations overlap in 14 different DMAs:
DMA Sinclair Tribune
DMA 6: Washington WJLA-TV (ABC) WDCW (CW) (Hagerstown)
KUNS-TV (Univision) KCPQ (FOX) DMA 12: Seattle-Tacoma KOMO-TV (ABC) KZJO (MyTV) KPLR-TV (CW) DMA 21: St. Louis KDNL-TV (ABC) KTVI (FOX)
KATU (ABC) DMA 22: Portland, OR KRCW-TV (CW) KUNP (Univision) KMYU (MyTV) KUTV (CBS) DMA 30: Salt Lake City KSTU (FOX) KENV (NBC) KJZZ-TV (Independent) WVTV (CW) DMA 36: Milwaukee WITI (FOX) WCGV-TV (MyTV)
KOKH-TV (FOX) KAUT-TV (Independent) DMA 41: Oklahoma City KOCB (CW) KFOR-TV (NBC)
DMA 43: Grand Rapids- WWMT (CBS) WXMI (FOX) Kalamazoo-Battle Creek WWMT-DT2 (CW)
WHP-TV (CBS) DMA 45: Harrisburg- WHP-DT2 (MyTV) WPMT (FOX) Lancaster-Lebanon-York WHP-DT3 (CW)
DMA 47: Norfolk-Portsmouth- WGNT (CW) WTVZ (MyTV) Newport News WTKR (CBS)
DMA 48: Greensboro-High WXLV-TV (ABC) WGHP (FOX) Point-Winston-Salem WMYV (MyNetwork)
WQMY (MyTV) DMA 57: Wilkes Barre- WSWB (CW) WNEP-TV (ABC) Scranton-Hazleton WOLF-TV (FOX)
DMA 55: Richmond- WRLH-TV (FOX) WTVR-TV (CBS) Petersburg
DMA 68: Des Moines-Ames, IA KDSM –TV (FOX) WHO-DT (NBC)
7 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 11 of 28 PageID #:11
B. MARKET CONCENTRATION FOR BROADCAST TELEVISION
27. Despite the significant number of local broadcast stations operated across the 210
DMAs, ownership is highly concentrated.
28. For instance, both Sinclair and Tribune own a significant number of local television stations. Sinclair owns 192 stations in 89 DMAs (the largest number of local stations
owned by any company in the United States), and Tribune owns 42 local stations in 33 DMAs.
Notably, Tribune owns stations in each of the five largest DMAs—New York, Los Angeles,
Chicago, Philadelphia, and Dallas.
29. Sinclair’s website boasts about its enormous portfolio of local television stations
across the country,2 depicting the number of stations it owns in the largest population centers:
30. Tribune’s website also touts its geographic diversity and control,3 boasting that its
stations cover 44% of the country’s television audience:
2 http://sbgi.net/tv-stations/ 3 http://www.tribunemedia.com/our-brands/tribune-broadcasting/
8 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 12 of 28 PageID #:12
31. In recent years, mergers between television station owners have increased market
concentration and thereby decreased competition in many DMAs.
32. The FCC has also loosened certain restrictions on television station ownership
and opened the door to larger mergers. For instance, in November 2017, the FCC voted to amend
or reverse several “longstanding limits” on local television station ownership.4 These changes
included making it simpler for a single company to own two stations in a single DMA by
eliminating the “eight-voices test,” which only permitted the purchase of a second station “if
there would be eight independently owned stations following the purchase.”5 The FCC also eliminated the automatic rule against owning two of the top four stations in a single DMA.
33. For example, in 2015, Gray Television, Inc. (a large media company with broadcast stations in 44 DMAs) agreed to purchase Schurz Communications, Inc. (a company with 10 stations in seven DMAs) for approximately $440 million. DOJ required divestitures in two DMAs where Gray and Schurz overlapped, but otherwise approved the merger.
4 FCC Rolls Back Limits on Local Broadcast Ownership, available at https://www.wsj.com/articles/fcc-relaxes-limits-of-local-media-ownership-1510856675 (Nov. 17, 2017). 5 Id.
9 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 13 of 28 PageID #:13
34. In 2018, just three years later, Gray Television agreed to acquire Raycom Media
in a $3.6 billion dollar deal. If the regulators ultimately approve the merger, Gray would then
own 142 stations in 92 DMAs. So, in the span of just three years, Gray Television would become
the third-largest local television station owner.
35. In May 2017, Sinclair agreed to acquire Tribune for $3.9 billion. Sinclair and
Tribune’s proposed merger would have been a landmark development in local television
ownership. But on August 9, 2018, in large part due to increased scrutiny from the FCC (even
with the relaxed regulatory environment), Tribune withdrew from the merger.
C. LOCAL TELEVISION ADVERTISING
36. Because broadcast stations air free content to viewers, advertising revenue is at the core of a television station’s business model. According to a recent PricewaterhouseCoopers report, a nationwide aggregate of $70 billion was spent on television advertising in 2017.6
37. Plaintiff, for example, spent over $89 million in local advertising (primarily on
local television spots) in just five years from 2014 through 2018 because Plaintiff’s business
model depended on reaching local audiences to market its retail businesses.
38. For each hour of air time, a station typically apportions a fixed percentage of time
to advertising. For example, according to Nielsen data as of 2013, commercials occupied
approximately 14 minutes and 15 seconds of each hour on broadcast networks.
1. Superiority of the broadcast television advertising platform
39. Broadcast television spot advertising is one of the most effective media for
reaching potential customers in a specific geographic area. Broadcast advertising is typically
considered far superior to radio, newspapers, and billboards given the combination of audio and
video features. Further, despite the increased availability of cable network and digital
6 https://www.broadcastingcable.com/news/tv-ad-revenue-to-grow-to-74b-by-2022-pwc
10 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 14 of 28 PageID #:14
advertising, broadcast spot advertising remains a top choice of many advertisers with no easy substitute.
40. Broadcast television stations are also far superior to subscription cable television stations for advertising purposes. Broadcast stations typically reach over 90% of homes within a
DMA, while subscription stations have more limited target audiences in that same market.
41. Moreover, subscription services offered by service providers like Comcast and
Verizon often bundle hundreds of channels, thereby fragmenting the DMA into small demographic segments. As a result, broadcast stations often have higher viewership than cable stations and also offer a wider demographic to advertisers.
2. National versus local advertising
42. Television advertising can take two forms—national and local.
43. Large advertisers often purchase national advertising time with national broadcast networks, which then allows a single advertiser’s commercial to be run across the entire country.
Every local broadcast station affiliate is then required to air certain national advertising.
44. But for most advertisers—especially regional businesses like retailers and auto dealerships—local “spot advertising” allows for a more targeted and cost effective approach as local spots are only targeted at the viewing audiences within that DMA. This provides greater precision to advertisers seeking to reach a specific demographic within a geographic area.
45. Plaintiff, which operated approximately 270 retail stores across the country, is a prime example of a regionally-focused business that depended on local spot advertising to reach its target audiences.
46. Moreover, while there are certainly nationally televised events that lend themselves to nationwide commercials, much more frequently there are televised events that lend themselves to spot advertising in particular DMAs. Sporting events provide a particularly clear
11 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 15 of 28 PageID #:15
example of this. An advertiser—say a car dealer in Schaumburg—seeking to reach customers in
Chicago during football season might choose to advertise on whatever local television station is broadcasting the Bears game.
3. Role of Nielsen ratings in the spot advertising market
47. Although certain stations also evaluate their own viewership as well, viewership is measured primarily by Nielsen. Nielsen routinely studies a sample size of television households representative of a DMA. Once the sample population is selected, Nielsen tracks viewership habits by installing devices that collect data, along with other methods that take advantage of newer technology associated with non-traditional viewing options, such as digital video recorders and on-demand programming.
48. Nielsen then analyzes the collected data from the sample population and measures viewership by calculating rating points, which are equal to the percentage of the total households in the DMA that viewed certain content. So, a television show with a 1.0 rating point is viewed by 1% of all households in the DMA.
49. Rating points can measure national viewership, but, more relevant to this
Complaint, they can also measure viewership by DMA. This data is particularly helpful to advertisers measuring the potential impact of their local advertising.
4. Pricing of local television spot advertisements
50. Advertisers and advertising agencies rely heavily on DMAs and the corresponding viewership statistics and demographics to measure potential viewing audiences for media advertising strategies. This data informs the pricing for spot ads and also indicates how effective a particular advertising campaign can be.
51. In a competitive DMA, a station’s spot pricing rates are based on that station’s ability to attract certain viewing audiences. In other words, if a particular station attracts a larger
12 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 16 of 28 PageID #:16
audience or a larger share of a particular demographic as a result of quality programming content, it typically charges more for advertising. On the flip side, a station with low viewership charges less.
52. Local television stations typically price local advertising spots using a cost-per- rating point (also referred to as “cost-per-point,” “CPP,” or “cost-per-gross rating point”). For example, for a popular prime time show, advertising spots may cost $500 per point. If the advertiser seeks to purchase a spot for that show, and the show has 3.0 rating points, the cost of the spot would be $1,500.
53. Television station owners (including Defendants) often create a pricing sheet referred to as a “rate card.” The rate card lists the various costs-per-point for the different potential spots. For example, a rate card may list a cost-per-point based on demographics or particular programming content or days of the week. These rate cards can then be used in negotiations with agencies and advertisers. Television stations update their rate cards frequently.
54. Rate cards are competitively sensitive, and the sharing of such information with other stations in a DMA would be against self-interest.
5. Role of advertising agencies and “rep firms”
55. Many advertisers utilize advertising agencies to purchase advertising spots as part of their advertising campaigns. Agencies act as an intermediary between an advertiser client and television stations.
56. Although there are also local ad buyers, agencies often handle spot negotiations all across the country in different DMAs regardless of where the agency is physically located.
57. A prospective advertiser will work with an agency to both develop content and establish an appropriate “media plan.” The media plan factors in the advertiser’s budget as well as the advertiser’s target audience, among other things. With respect to the target audience,
13 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 17 of 28 PageID #:17
considerations include the appropriate DMAs for the advertiser’s commercials as well as the
demographic the advertiser seeks to reach. For instance, a hip clothing store in Evanston might
choose to advertise on the CW network’s WPWR during its evening programming, as the shows
aired on CW at night attract a younger audience, rather than on ABC, CBS, or NBC.
58. Following the development of the media plan, a “buyer” at the ad agency negotiates the ad buy with an “account executive” at the television station. These buyers continually exchange emails and phone calls with station employees to determine the cost-per- point that the station will charge. Frequently, the stations will guarantee that, for its advertising spend, the advertiser’s commercials will reach a certain number of viewers. This is typically expressed as a “gross ratings points” (“GRP”) guarantee, and it would be based on Nielsen ratings, which are described further below. GRPs have been described as the “currency” that agencies work with in the sense that an agency will tell a television station what GRPs they want for a particular ad buy and then will work with the station to develop a plan to meet the desired
GRP target.
59. Once a price is negotiated between an agency and a station, the advertiser must
grant final approval and then provide the funds necessary to secure the advertising spots. The
agency solely acts as an intermediary, often only paying for the spots once the agency receives
the funds from the advertiser. (Agencies could, but do not usually, buy advertising time in
advance and then hope to resell that time to their clients. Such an arrangement is referred to as a
“principal model.”)
60. Following the ad buy, agencies will then monitor the station’s airing of the
commercials, as well as the associated ratings, to ensure that the station is meeting its obligations
with respect to the GRP guarantee. When a station fails to meet its guarantee, that failure is
14 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 18 of 28 PageID #:18
measured in “audience deficiency units” (“ADUs”), and, in such a circumstance, the station is required to true up with the advertiser, typically by offering air time for additional ads.
61. Although most advertising is done through an agency, certain advertisers— particularly smaller businesses—sometimes negotiate directly with television stations in an attempt to avoid paying agency fees.
62. Some stations hire what are known as “rep firms,” which are essentially national sales companies that negotiate advertising spot pricing for stations all across the country. Like ad agencies, rep firms are not necessarily located in the DMA as the station that hired them.
Accordingly, even though a rep firm may be based in New York, the firm may handle price negotiations for stations in DMAs as far as away as California or Alaska.
D. UNLAWFUL PRICE FIXING CONSPIRACY AND DEPARTMENT OF JUSTICE INVESTIGATION
63. Television stations have the upper hand in negotiations with regard to key information about supply and demand. And, according to several industry insiders, stations may misrepresent certain information during the course of negotiations in an effort to preserve or increase pricing.
64. If a station owner unilaterally misrepresented information to artificially preserve or increase prices, such conduct would not be terribly effective because advertisers would simply look for cheaper prices at another station in the DMA. However, on information and belief, station owners instead have been coordinating their pricing to maintain or inflate prices.
65. Upon information and belief, station owners have shared their pricing information and coordinated efforts to stabilize or inflate spot prices, including setting a “floor” for all spot pricing. Within a DMA, no station owner that is party to the conspiracy could reduce spot prices below a certain cost-per-point. By setting such a floor, but then still negotiating with individual
15 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 19 of 28 PageID #:19
advertisers, stations maintain the façade of a competitive market when in reality they have fixed
prices.
66. Setting floors is something that broadcast stations are accustomed to with regard
to political advertisements. The FCC requires broadcast stations to charge political candidates
the “lowest unit rate” (the lowest cost-per-point for a given day or program) offered. Station
owners are therefore well aware of their “lowest unit rate” and could easily share that
information with other station owners
67. On July 26, 2018, the Wall Street Journal reported that DOJ is investigating
Sinclair, Tribune, and other independent television station owners for violating federal antitrust
laws by illegally coordinating efforts to inflate local advertising spot pricing.7 This investigation
resulted from DOJ’s recent scrutiny of the proposed merger between Sinclair and Tribune.
68. This investigation focuses on these companies’ “coordinated efforts” between advertising sales teams to compare pricing performance, which then resulted in higher rates charged to advertisers.
69. In its comment to the Wall Street Journal, Sinclair practically conceded that the
focus of DOJ’s investigation (sharing pricing information that resulted in inflated advertising
pricing) is a common industry-wide practice: “It is our understanding that this is not specific to
Sinclair but focuses on the larger broadcast industry.”
70. DOJ’s investigation mirrors the allegations in this Complaint—that Defendants
shared sensitive pricing information in an effort to fix, raise, maintain, and/or stabilize the prices
for local spot television advertising.
7 Justice Department Investigates TV Station Owners Over Advertising Sales, available at https://www.wsj.com/articles/justice-department-investigates-tv-station-owners-over-advertising-sales- 1532633979 (July 26, 2018).
16 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 20 of 28 PageID #:20
71. While the Wall Street Journal article did not identify the other television station owners under investigation by DOJ, Plaintiff’s counsel continues to investigate which additional companies conspired with Sinclair and/or Tribune to implement their illegal scheme.
V. EFFECTS OF THE SCHEME ON COMPETITION AND ANTITRUST INJURY TO PLAINTIFF AND MEMBERS OF THE CLASS
72. Defendants’ conspiracy to fix, raise, maintain, and/or stabilize the prices for local spot television advertising suppressed competition in the Overlapping DMAs in which Plaintiff and the other Class members purchased spot advertising. As a result of the conspiracy, Plaintiff and the other Class members were charged supracompetitive prices for local spots.
73. In a competitive DMA, stations would compete with each other to offer lower pricing for advertising spots. Advertisers and advertising agencies routinely “shop around” between different stations in a DMA to obtain the best cost-per-point. And stations operating in a competitive market would lower their pricing accordingly.
74. Here, however, Defendants conspired to artificially inflate the prices charged to advertisers. Defendants understood that if they shared information with each other in the
Overlapping DMAs, they could leverage that information to prevent advertisers from obtaining lower prices or switching to other stations for a lower cost-per-point. In effect, Defendants’ conspiracy impaired the ability of advertisers to obtain competitive rates in the Overlapping
DMAs.
75. In a competitive market, advertisers would benefit from Defendants’ direct competition with each other in the sale of spot advertising in the Overlapping DMAs. But as a result of the price-fixing conspiracy, advertisers’ bargaining positions were weaker, and the prices charged for spot advertising were inflated.
17 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 21 of 28 PageID #:21
76. To that end, Plaintiff—a company that purchased millions of dollars in local spot
advertising from Defendants in five of the Overlapping DMAs—was harmed by paying
supracompetitive prices. Plaintiff’s retail business depended on local advertising to target local
audiences, and Defendants’ conduct inflated the prices that Plaintiff was forced to pay.
VI. RELEVANT MARKETS
77. The relevant product market for this Complaint is the sale of television spot advertising to advertisers targeting viewers in each of the Overlapping DMAs. Defendants sell spot advertising to local and national advertisers in each of the Overlapping DMAs. Spot advertising placed on television stations in a particular DMA is intended to reach the regional audiences in that DMA. Stations broadcasting outside of that DMA do not provide effective access to those same regional audiences.
78. The relevant geographic markets are the Overlapping DMAs. In all likelihood, as
Plaintiff’s investigation continues, the relevant geographic markets will expand to cover additional DMAs.
79. In fact, while Plaintiff purchased millions of dollars in local spots in five of the
Overlapping DMAs, Plaintiff also spent tens of millions more in other DMAs across the country.
Plaintiff is therefore in a prime position to expand the geographic reach of the investigation and to represent the affected Class.
VII. BARRIERS TO ENTRY
80. New entry into each Overlapping DMA is highly unlikely. The FCC regulates the issuance of broadcast television licenses. Those licenses are difficult to obtain in the first instance because the availability of broadcast spectrum is limited, and the regulatory approval process is burdensome. Moreover, given the market dominance of the Big Four stations (plus
18 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 22 of 28 PageID #:22
stations like The CW), a new entrant likely would have little success in providing meaningful
competition to existing stations within an Overlapping DMA.
VIII. EFFECTS ON INTERSTATE COMMERCE
81. During the Class Period (as defined below), Defendants routinely negotiated with,
and sold to, advertisers located in many states.
82. Billions of dollars in local television advertising spots flow through interstate commerce every year. Defendants’ manipulation of spot pricing therefore had a direct, substantial, and foreseeable impact on interstate commerce in the United States.
83. Defendants’ conduct had a direct and adverse impact on competition in the United
States. Without Defendants’ conspiracy to manipulate pricing, television spot pricing would have
been set by a competitive market in each Overlapping DMA.
IX. CLASS ACTION ALLEGATIONS
84. Plaintiff sues on its own behalf and, pursuant to Federal Rule of Civil Procedure
23(b)(3) and (b)(2), as a representative of a class (the “Class”) seeking damages and other relief
defined as:
All persons and entities that paid for all or a portion of the cost of local television advertising spots in an Overlapping DMA to Defendants at any time from January 1, 2014 to the present (the “Class Period”). Excluded from the Class are Defendants and their officers, directors, senior executives, subsidiaries, or affiliates; all Counsel of Record; the Court and Court personnel, and any member of their immediate family.
85. The Class contains thousands of members. Members of the Class are so numerous
and geographically dispersed that joinder of all members of the Class is impracticable.
Moreover, given the costs of complex antitrust litigation, it would be cost prohibitive for many
plaintiffs to bring individual claims and join them together. The Class is readily identifiable from
information and records in Defendants’ possession.
19 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 23 of 28 PageID #:23
86. Plaintiff’s claims are typical of the claims of other Class members as they arise out of the same course of conduct and the same legal theories, and they challenge Defendants’ conduct with respect to the Class as a whole.
87. Plaintiff will fairly and adequately protect and represent the interests of the other members of the Class. Plaintiff’s interests are coincident with, and not antagonistic to, those of the other Class members.
88. Plaintiff has retained able and experienced antitrust and class action litigators as its counsel. Plaintiff has no conflicts with other Class members and will fairly and adequately protect the interests of the Class.
89. Questions of law and fact common to the members of the Class predominate over questions that may affect only individual members of the Class because Defendants have acted on grounds generally applicable to the entire Class. Such generally applicable conduct is inherent in Defendants’ wrongful conduct.
90. Questions of law and fact common to the Class include, but are not limited to:
(a) Whether Defendants entered into a price fixing agreement in the
Overlapping DMAs;
(b) Whether Defendants illegally shared pricing information in the
Overlapping DMAs;
(c) Whether Defendants inflated or otherwise fixed the price for advertising spots, including whether they employed the “Lowest Unit Rate” or Rate Cards to do so;
(d) The scope and duration of the unlawful agreement;
(e) Whether such agreement was a per se violation of the Sherman Act;
20 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 24 of 28 PageID #:24
(f) Whether Defendants’ unlawful conduct caused injury to the business or property of Plaintiff and other members of the Class;
(g) Whether any such injury constitutes antitrust injury;
(h) The appropriate measure of damages suffered by Plaintiff and other members of the Class;
(i) Whether Plaintiff and other members of the Class are entitled to injunctive relief; and
(j) The nature and scope of injunctive relief necessary to restore a competitive market.
91. Class action treatment is a superior method for the fair and efficient adjudication of the controversy. Such treatment will permit a large number of similarly-situated persons to prosecute their common claims in a single forum simultaneously, efficiently, and without the unnecessary duplication of evidence, effort, or expense that numerous individual actions would engender. The benefits of proceeding through the class mechanism, including providing injured persons a method for obtaining redress on claims that could not practicably be pursued individually, substantially outweighs potential difficulties in management of this class action.
92. Injunctive relief is appropriate with respect to the Class as a whole, because
Defendants have acted on grounds generally applicable to the Class.
93. Plaintiff knows of no special difficulty to be encountered in litigating this action that would preclude its maintenance as a class action.
21 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 25 of 28 PageID #:25
X. PLAINTIFF’S CLAIMS ARE TIMELY
A. Defendants Have Engaged in a Continuing Violation
94. This Complaint alleges a continuing course of conduct (including conduct within the limitations periods), and Defendants’ unlawful conduct has inflicted continuing and accumulating harm within the applicable statutes of limitations.
95. Each time Defendants engaged in wrongful sharing of pricing information and/or manipulating spot pricing, Defendants undertook an overt act that has inflicted harm on Plaintiff and other members of the Class.
96. Because Defendants have engaged in a continuing course of conduct, Plaintiff’s claims are timely.
B. Fraudulent Concealment Tolled the Statute of Limitations
97. Additionally, application of the doctrine of fraudulent concealment tolled the statute of limitations on Plaintiff’s claims.
98. During the relevant statute of limitations period, Plaintiff had neither actual nor constructive knowledge of the pertinent facts constituting its claims for relief asserted herein.
Plaintiff and other members of the Class did not discover, and could not have discovered through the exercise of reasonable diligence, that Defendants entered into a conspiracy to manipulate advertising spot pricing. Prior to the revelation that DOJ was investigating Defendants for fixing prices, no information in the public domain or available to Plaintiff suggested that Defendants had entered into an illegal price manipulation conspiracy.
99. Defendants actively concealed, suppressed, and failed to disclose material facts to
Plaintiff and other members of the Class concerning Defendants’ unlawful price manipulation.
Criminal and civil penalties for price fixing or manipulation are severe. Not surprisingly,
Defendants took affirmative measures to conceal this agreement.
22 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 26 of 28 PageID #:26
100. Defendants engaged in a secret conspiracy that did not give rise to facts that
would put Plaintiff or the other Class members on inquiry notice that Defendants conspired to
manipulate the prices of local advertising spots.
101. The concealed, suppressed, and omitted facts would have been important to
Plaintiff and other members of the Class because they related to potential decreases in spot pricing.
102. As a result of Defendants’ fraudulent concealment of their conspiracy, the running
of any statute of limitations has been tolled with respect to the claims that Plaintiff and the other
Class members allege herein.
XI. CLAIM FOR RELIEF
Violation of Section 1 of the Sherman Act, 15 U.S.C. § 1
103. Plaintiff incorporates the preceding paragraphs by reference.
104. Defendants engaged in a contract, combination, or conspiracy in unreasonable
restraint of trade, in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. Specifically,
Defendants agreed to fix, raise, maintain, and/or stabilize local spot television advertising prices
with the purpose and effect of charging Class members supracompetitive prices for local spots
and restraining competition in the Overlapping DMAs. Defendants’ price-fixing conspiracy was
effectuated by the sharing of competitively sensitive price information.
105. Defendants’ conduct injured Plaintiff and other Class members by depriving them
of free and fair competition in the market for local advertising spots.
106. Defendants’ price fixing agreement is a per se violation of Section 1 of the
Sherman Act.
23 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 27 of 28 PageID #:27
107. As a direct and proximate result of Defendants’ violation of Section 1 of the
Sherman Act, Plaintiff and the Class paid higher prices for advertising spots than they would have paid had the market for advertising spots been competitive in the Overlapping DMAs.
XII. DEMAND FOR JUDGMENT
108. WHEREFORE, Plaintiff, on behalf of itself and the proposed Class, respectfully requests:
(a) That the Court certify this lawsuit as a class action under Rules 23(a),
(b)(2), and (b)(3) of the Federal Rules of Civil Procedure; that Plaintiff be designated as a class representative; and that Plaintiff’s counsel be appointed as class counsel;
(b) That the unlawful conduct alleged herein be adjudged and decreed to violate the Sherman Act;
(c) That the Defendants be permanently enjoined and restrained from continuing and maintaining the price fixing conspiracy as alleged in this Complaint;
(d) That the Court award Plaintiff and the Class damages against Defendants for their violation of federal antitrust laws, in an amount to be trebled in accordance with such laws, plus interest;
(e) That the Court award Plaintiff and the Class their costs of suit, including reasonable attorneys’ fees and expenses, as provided by law; and
(f) That the Court award such further and additional relief as the case may require and the Court may deem just and proper under the circumstances.
XIII. JURY DEMAND
109. Pursuant to Rule 38 of the Federal Rules of Civil Procedure, Plaintiff, on behalf of itself and the proposed Class, demands a trial by jury on all issues so triable.
24 Case: 1:18-cv-06758 Document #: 1 Filed: 10/05/18 Page 28 of 28 PageID #:28
Date: October 5, 2018
/s/ Adam J. Levitt Adam J. Levitt John E. Tangren DICELLO LEVITT & CASEY LLC Ten North Dearborn Street, Eleventh Floor Chicago, Illinois 60602 Tel: (312) 214-7900 [email protected] [email protected]
Gregory S. Asciolla (pro hac vice pending) Karin E. Garvey (pro hac vice pending) Robin A. van der Meulen (pro hac vice pending) Brian Morrison (pro hac vice pending) Jonathan Crevier (pro hac vice pending) LABATON SUCHAROW LLP 140 Broadway New York, New York 10005 Tel: (212) 907-0700 Fax: (212) 818-0477 [email protected] [email protected] [email protected] [email protected] [email protected]
Counsel for Plaintiff and the Proposed Class
25 Case: 1:18-cv-06758 Document #: 1-1 Filed: 10/05/18 Page 1 of 2 PageID #:29 ILND 44 (Rev. 07/10/17) CIVIL COVER SHEET The ILND 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service of pleadings or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. (See instructions on next page of this form.) I. (a) PLAINTIFFS DEFENDANTS The Bon-Ton Stores, Inc., on behalf of itself and all others similarly Sinclair Broadcast Group, Inc.; Tribune Media Company; and John situated Does 1-5 (b) County of Residence of First Listed Plaintiff York County, PA County of Residence of First Listed Defendant Baltimore County, MD (Except in U.S. plaintiff cases) (In U.S. plaintiff cases only) Note: In land condemnation cases, use the location of the tract of land involved.
(c) Attorneys (firm name, address, and telephone number) Attorneys (if known) Adam J. Levitt, DiCello Levitt & Casey LLC 10 North Dearborn St., 11th Floor, Chicago, IL 60602, (312) 214-7900
II. BASIS OF JURISDICTION (Check one box, only.) III. CITIZENSHIP OF PRINCIPAL PARTIES (For Diversity Cases Only.) (Check one box, only for plaintiff and one box for defendant.) 1 U.S. Government ■ 3 Federal Question PTF DEF PTF DEF Plaintiff (U.S. Government not a party) Citizen of This State 1 1 Incorporated or Principal Place 4 4 of Business in This State
2 U.S. Government 4 Diversity Citizen of Another State 2 2 Incorporated and Principal Place 5 5 Defendant (Indicate citizenship of parties in Item III.) of Business in Another State
Citizen or Subject of a 3 3 Foreign Nation 6 6 Foreign Country IV. NATURE OF SUIT (Check one box, only.) CONTRACT TORTS PRISONER PETITIONS LABOR OTHER STATUTES 110 Insurance PERSONAL INJURY PERSONAL INJURY 510 Motions to Vacate Sentence 710 Fair Labor Standards Act 375 False Claims Act 120 Marine 310 Airplane 365 Personal Injury - Habeas Corpus: 720 Labor/Management Relations 376 Qui Tam (31 USC 3729 (a)) 130 Miller Act 315 Airplane Product Product Liability 530 General 740 Railway Labor Act 400 State Reapportionment 140 Negotiable Instrument Liability 367 Health Care/ 535 Death Penalty 751 Family and Medical 410 Antitrust 150 Recovery of Overpayment 320 Assault, Libel & Slander Pharmaceutical 540 Mandamus & Other Leave Act 430 Banks and Banking & Enforcement of Judgment 330 Federal Employers’ Personal Injury 550 Civil Rights 790 Other Labor Litigation 450 Commerce 151 Medicare Act Liability Product Liability 555 Prison Condition 791 Employee Retirement 460 Deportation 152 Recovery of Defaulted Student 340 Marine 368 Asbestos Personal Injury 560 Civil Detainee – Conditions Income Security Act 470 Racketeer Influenced and Loans (Excludes Veterans) 345 Marine Product Liability Product Liability of Confinement Corrupt Organizations 153 Recovery of Veteran’s Benefits 350 Motor Vehicle 480 Consumer Credit 160 Stockholders’ Suits 355 Motor Vehicle PERSONAL PROPERTY PROPERTY RIGHTS 490 Cable/Sat TV 190 Other Contract Product Liability 370 Other Fraud 820 Copyrights 850 Securities/Commodities/ 195 Contract Product Liability 360 Other Personal Injury 371 Truth in Lending 830 Patent Exchange 196 Franchise 362 Personal Injury - 380 Other Personal 835 Patent – Abbreviated 890 Other Statutory Actions Medical Malpractice Property Damage New Drug Application 891 Agricultural Acts 385 Property Damage 840 Trademark 893 Environmental Matters Product Liability 895 Freedom of Information Act 896 Arbitration REAL PROPERTY CIVIL RIGHTS BANKRUPTCY FORFEITURE/PENALTY SOCIAL SECURITY 899 Administrative Procedure 210 Land Condemnation 440 Other Civil Rights 422 Appeal 28 USC 158 625 Drug Related Seizure 861 HIA (1395ff) Act/Review or Appeal of 220 Foreclosure 441 Voting 423 Withdrawal 28 USC 157 of Property 21 USC 881 862 Black Lung (923) Agency Decision 230 Rent Lease & Ejectment 442 Employment 690 Other 863 DIWC/DIWW (405(g)) 950 Constitutionality of 240 Torts to Land 443 Housing/ 864 SSID Title XVI State Statutes 245 Tort Product Liability Accommodations IMMIGRATION 865 RSI (405(g)) 290 All Other Real Property 445 Amer. w/Disabilities - 462 Naturalization Application Employment 463 Habeas Corpus - 446 Amer. w/Disabilities - Alien Detainee FEDERAL TAXES (Prisoner Petition ) Other 465 Other Immigrant 870 Taxes (U.S. Plaintiff 448 Education Actions or Defendant) 871 IRS—Third Party 26 USC 7609
V. ORIGIN (Check one box, only.) ■ 1 Original 2 Removed from 3 Remanded from 4 Reinstated or 5 Transferred from 6 Multidistrict 8 Multidistrict Proceeding State Court Appellate Court Reopened Another District Litigation Litigation (specify) Direct File VI. CAUSE OF ACTION (Enter U.S. Civil Statute under which you are filing and VII. Previous Bankruptcy Matters (For nature of suit 422 and 423, enter the case number and write a brief statement of cause.) judge for any associated bankruptcy matter previously adjudicated by a judge of this Court. Use a separate 15 U.S.C. § 1, Violation of the Sherman Act attachment if necessary.) VIII. REQUESTED IN Check if this is a class action under Rule DEMAND $ Check Yes only if demanded in complaint. COMPLAINT: 23, F.R.CV.P. JURY DEMAND: Yes No IX. RELATED CASE(S) (See instructions) IF ANY Judge Hon. Virginia M. Kendall Case Number MDL No. 2867 X. Is this a previously dismissed or remanded case? Yes No If yes, Case # Name of Judge Date Signature of attorney of record October 5, 2018 /s/ Adam J. Levitt Case: 1:18-cv-06758INSTRUCTIONS FOR Document ATTORNEYS #: COMPLETING 1-1 Filed: 10/05/18 CIVIL COVER Page SHEET 2 ofFORM 2 PageID JS 44 #:30 Authority for Civil Cover Sheet
The JS 44 civil cover sheet and the information contained herein neither replaces nor supplements the filings and service of pleading or other papers as required by law, except as provided by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating the civil docket sheet. Consequently, a civil cover sheet is submitted to the Clerk of Court for each civil complaint filed. The attorney filing a case should complete the form as follows:
I. (a) Plaintiffs-Defendants. Enter names (last, first, middle initial) of plaintiff and defendant. If the plaintiff or defendant is a government agency, use only the full name or standard abbreviations. If the plaintiff or defendant is an official within a government agency, identify first the agency and then the official, giving both name and title.
(b) County of Residence. For each civil case filed, except U.S. plaintiff cases, enter the name of the county where the first listed plaintiff resides at the time of filing. In U.S. plaintiff cases, enter the name of the county in which the first listed defendant resides at the time of filing. (NOTE: In land condemnation cases, the county of residence of the "defendant" is the location of the tract of land involved.)
(c) Attorneys. Enter the firm name, address, telephone number, and attorney of record. If there are several attorneys, list them on an attachment, noting in this section "(see attachment)".
II. Jurisdiction. The basis of jurisdiction is set forth under Rule 8(a), F.R.Cv.P., which requires that jurisdictions be shown in pleadings. Place an "X" in one of the boxes. If there is more than one basis of jurisdiction, precedence is given in the order shown below.
United States plaintiff. (1) Jurisdiction based on 28 U.S.C. 1345 and 1348. Suits by agencies and officers of the United States are included here.
United States defendant. (2) When the plaintiff is suing the United States, its officers or agencies, place an "X" in this box.
Federal question. (3) This refers to suits under 28 U.S.C. 1331, where jurisdiction arises under the Constitution of the United States, an amendment to the Constitution, an act of Congress or a treaty of the United States. In cases where the U.S. is a party, the U.S. plaintiff or defendant code takes precedence, and box 1 or 2 should be marked.
Diversity of citizenship. (4) This refers to suits under 28 U.S.C. 1332, where parties are citizens of different states. When Box 4 is checked, the citizenship of the different parties must be checked. (See Section III below; NOTE: federal question actions take precedence over diversity cases.)
III. Residence (citizenship) of Principal Parties. This section of the JS 44 is to be completed if diversity of citizenship was indicated above. Mark this section for each principal party.
IV. Nature of Suit. Place an "X" in the appropriate box. If the nature of suit cannot be determined, be sure the cause of action, in Section VI below, is sufficient to enable the deputy clerk or the statistical clerk(s) in the Administrative Office to determine the nature of suit. If the cause fits more than one nature of suit, select the most definitive.
V. Origin. Place an "X" in one of the six boxes.
Original Proceedings. (1) Cases which originate in the United States district courts.
Removed from State Court. (2) Proceedings initiated in state courts may be removed to the district courts under Title 28 U.S.C., Section 1441. When the petition for removal is granted, check this box.
Remanded from Appellate Court. (3) Check this box for cases remanded to the district court for further action. Use the date of remand as the filing date.
Reinstated or Reopened. (4) Check this box for cases reinstated or reopened in the district court. Use the reopening date as the filing date.
Transferred from Another District. (5) For cases transferred under Title 28 U.S.C. Section 1404(a). Do not use this for within district transfers or multidistrict litigation transfers.
Multidistrict Litigation. (6) Check this box when a multidistrict case is transferred into the district under authority of Title 28 U.S.C. Section 1407. When this box is checked, do not check (5) above.
VI. Cause of Action. Report the civil statute directly related to the cause of action and give a brief description of the cause. Do not cite jurisdictional statutes unless diversity. Example: U.S. Civil Statute: 47 USC 553 Brief Description: Unauthorized reception of cable service
VII. Previous Bankruptcy Matters For nature of suit 422 and 423 enter the case number and judge for any associated bankruptcy matter previously adjudicated by a judge of this court. Use a separate attachment if necessary.
VIII. Requested in Complaint. Class Action. Place an "X" in this box if you are filing a class action under Rule 23, F.R.Cv.P. Demand. In this space enter the actual dollar amount being demanded or indicate other demand, such as a preliminary injunction Jury Demand. Check the appropriate box to indicate whether or not a jury is being demanded.
IX. Related Cases. This section of the JS 44 is used to reference related pending cases, if any. If there are related pending cases, insert the docket numbers and the corresponding judge names for such cases. X. Refiling Information. Place an "X" in the Yes box if the case is being refiled or if it is a remanded case, and indicate the case number and name of judge. If this case is not being refiled or has not been remanded, place an "X" in the No box.
Date and Attorney Signature. Date and sign the civil cover sheet.
Rev. 1 – 04/13/16