     13-1267
     Vedder Software Group Ltd. v. Insurance Services Office, Inc., et al

                          UNITED STATES COURT OF APPEALS
                              FOR THE SECOND CIRCUIT

                                     SUMMARY ORDER
     RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED
     ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE
     PROCEDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A
     DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
     ELECTRONIC DATABASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMMARY ORDER MUST
     SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.

 1            At a stated term of the United States Court of Appeals
 2       for the Second Circuit, held at the Thurgood Marshall United
 3       States Courthouse, 40 Foley Square, in the City of New York,
 4       on the 18th day of October, two thousand thirteen.
 5
 6       PRESENT: DENNIS JACOBS,
 7                RALPH K. WINTER,
 8                CHESTER J. STRAUB,
 9                              Circuit Judges.
10
11       - - - - - - - - - - - - - - - - - - - -X
12       VEDDER SOFTWARE GROUP LTD.,
13                Plaintiff-Appellant,
14
15                    -v.-                                               13-1267
16
17       INSURANCE SERVICES OFFICE, INC.,
18       XACTWARE, INC., LIBERTY MUTUAL HOLDING
19       COMPANY INC., LIBERTY MUTUAL INSURANCE
20       GROUP INC., LIBERTY MUTUAL INSURANCE
21       COMPANY, and LIBERTY MUTUAL FIRE
22       INSURANCE COMPANY,
23                Defendant-Appellees,
24       - - - - - - - - - - - - - - - - - - - -X
25
26       FOR APPELLANT:                        DANIEL J. CENTI, Feeney, Centi and
27                                             Mackey, Albany, New York.
28

                                                  1
 1   FOR APPELLEES:             JOEL M. COHEN (Gina Caruso, on
 2                              brief), Davis Polk & Wardwell
 3                              LLP, New York, New York, for
 4                              Insurance Services Office, Inc.
 5                              and Xactware, Inc.
 6
 7                              KEVIN J. FEE (David T. McTaggart,
 8                              on brief), Kornstein Veisz
 9                              Wexler & Pollard, LLP, New York,
10                              New York, for Liberty Mutual
11                              Holding Company Inc., Liberty
12                              Mutual Group Inc., Liberty
13                              Mutual Insurance Company, and
14                              Liberty Mutual Fire Insurance
15                              Company.
16
17        Appeal from a judgment of the United States District
18   Court for the Northern District of New York (Suddaby, J.).
19
20        UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED
21   AND DECREED that the judgment of the district court be
22   AFFIRMED.
23
24        Vedder Software Group appeals from a judgment of the
25   United States District Court for the Northern District of
26   New York (Suddaby, J.), dismissing its antitrust and
27   trademark infringement complaint. Vedder Software’s
28   product, the Estimating Wizard, provides estimates to the
29   casualty insurance industry. Xactware, Inc. markets a
30   competing software program, Xactimate. Xactware is wholly
31   owned by Insurance Services Office, Inc., which in turn is
32   wholly owned by Verisk Analytics, Inc., a publicly traded
33   company owned in part by various insurance companies--
34   including the Liberty Mutual defendants. Vedder alleges
35   various antitrust and trademark infringement claims arising
36   from the defendants’ ownership, required use, and design of
37   Xactimate. We assume the parties’ familiarity with the
38   underlying facts, the procedural history, and the issues
39   presented for review.
40
41        “We review de novo a district court’s decision to
42   dismiss a complaint for failure to state a claim pursuant to
43   FRCP 12(b)(6). We must accept all well-pleaded facts as
44   true and consider those facts in the light most favorable to
45   the plaintiff.” Patane v. Clark, 508 F.3d 106, 111 (2d Cir.
46   2007) (internal citations omitted). To survive a motion to
47   dismiss, “a complaint must contain sufficient factual

                                  2
 1   matter, accepted as true, to state a claim to relief that is
 2   plausible on its face.” Absolute Activist Value Master Fund
 3   Ltd. v. Ficeto, 677 F.3d 60, 65 (2d Cir. 2012) (quoting
 4   Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).
 5
 6   1.   Conspiracy Claim Under Sherman Act § 1
 7
 8        Section 1 of the Sherman Act condemns “[e]very
 9   contract, combination . . ., or conspiracy, in restraint of
10   trade or commerce . . . .” 15 U.S.C. § 1. “The crucial
11   question in a Section 1 case is therefore whether the
12   challenged conduct stem[s] from independent decision or from
13   an agreement, tacit or express.” Starr v. Sony BMG Music
14   Entm’t, 592 F.3d 314, 321 (2d. Cir. 2010)(internal quotation
15   marks omitted). Vedder does not allege an express agreement
16   among the defendant insurance companies, and instead relies
17   on the insurers’ parallel conduct.
18
19        “Although parallel business behavior is admissible
20   circumstantial evidence from which the fact finder may infer
21   agreement, it does not itself constitute a violation of the
22   Sherman Act.” Starr, 592 F.3d at 321 (internal quotation
23   marks omitted). “[A]llegations of parallel conduct ‘must be
24   placed in a context that raises a suggestion of a preceding
25   agreement, not merely parallel conduct that could just as
26   well be independent action.” Id. at 322 (quoting Bell
27   Atlantic Corp. v. Twombly, 550 U.S. 544, 557 (2007)).
28   Evidence is therefore required of additional circumstances,
29   often called “plus factors.” Mayor & City Council of
30   Baltimore, Md. v. Citigroup, Inc., 709 F.3d 129, 136 (2d
31   Cir. 2013). “Plus factors” include: “a common motive to
32   conspire, evidence that shows that the parallel acts were
33   against the apparent individual economic self-interest of
34   the alleged conspirators, and evidence of a high level of
35   interfirm communications.” Id. Vedder relies on two facts:
36   1) the insurers’ ownership interests in Verisk; and 2) their
37   alleged demands requiring the use of Xactimate. These
38   facts, accepted as true, do not plausibly plead a Sherman §
39   1 claim.
40
41        Vedder alleges that several large insurance companies,
42   accounting for the “vast majority of insurance business in
43   the United States,” control Verisk--Xactware’s ultimate
44   parent corporation. (Am. Compl. ¶¶ 6, 7, 9, 11). However,
45   the complaint identifies only Liberty Mutual and its
46   affiliates as members of the conspiracy. No other insurance
47   company is named. The insurers’ alleged control over Verisk

                                  3
 1   is also a legal conclusion, which we do not accept as true.
 2   See Starr, 592 F.3d at 321 (“accepting all factual
 3   allegations as true, but giving no effect to legal
 4   conclusions couched as factual allegations”) (internal
 5   quotation marks omitted). The cases cited by Vedder support
 6   no more than that competitors acting in a trade association
 7   or joint venture are capable of conspiring. See N. Tex.
 8   Specialty Physicians v. Fed. Trade Comm’n, 528 F.3d 346 (5th
 9   Cir. 2008); Daniel v. Am. Bd. of Emergency Med., 802 F.
10   Supp. 912 (W.D.N.Y. 1992). There is little doubt that
11   competing insurance companies would not constitute a single
12   entity for Sherman Act § 1 claims; but their common stake in
13   Verisk is not conclusive of a conspiracy.
14
15        The insurers’ alleged demand to require use of
16   Xactimate fails to show an agreement because it does not
17   “tend[] to exclude the possibility of independent action.”
18   Twombly, 550 U.S. at 555.   Such a demand would assure an
19   insurance company and its vendors utilize compatible
20   software to achieve consistency in estimates and ease in
21   sharing data. Thus, the alleged demand could be expected of
22   an insurer acting independently from its competitors. While
23   Vedder argues this demand extended to work done for other
24   insurers, this was not in the complaint, which alleges only
25   the demand was to “obtain or retain” the business of the
26   defendant insurers. (Am. Comp. ¶ 18).
27
28        Vedder’s complaint fails to establish an agreement
29   between the defendant insurance companies. Vedder does not
30   make the “numerous very specific allegations” made in Starr,
31   nor does it allege any of the “plus factors” this Court has
32   found sufficient to support a conspiracy claim. Mayor &
33   City Council of Baltimore, 709 F.3d at 136-37. Because the
34   allegations only infer the “mere possibility of misconduct,
35   . . . dismissal is appropriate.” Starr, 592 F.3d at 321.
36
37   2.   Trademark Infringement Claim
38
39        Section 43(a) of the Lanham Act provides a right of
40   action against “[a]ny person who, on or in connection with
41   any goods or services . . . uses in commerce any word, term,
42   name, symbol, or device, or any combination thereof . . .
43   likely to cause confusion . . . as to the origin,
44   sponsorship, or approval of his or her goods, services, or
45   commercial activities by another person.” 15 U.S.C. §
46   1125(a)(1). To prevail on a claim of trade dress
47   infringement, a plaintiff must prove: 1) that the mark is

                                  4
 1   distinctive as to the source of the good; 2) a likelihood of
 2   confusion between its good and the defendant’s; and, 3) that
 3   the trade dress is not functional. See Yurman Design, Inc.
 4   v. PAJ, Inc., 262 F.3d 101, 115-16 (2d Cir. 2001).
 5   Distinctiveness requires a showing that the mark has
 6   “secondary meaning,” so that “in the minds of the public,
 7   the primary significance of [the mark] is to identify the
 8   source of the product rather than the product itself.” Id.
 9   at 115.
10
11        Vedder’s complaint asserts the Estimating Wizard has a
12   “distinctive interface” of “non-functional elements” with a
13   “secondary meaning.” (Am. Compl. ¶ 44). The complaint also
14   alleges the defendants’ conduct is “likely to cause
15   confusion or mistake” regarding the affiliation of Xactimate
16   and the Estimating Wizard. (Am. Compl. ¶ 48). These bare
17   assertions “amount to nothing more than a formulaic
18   recitation of the elements” of a trademark infringement
19   claim. Iqbal, 556 U.S. at 681. “As such, the allegations
20   are conclusory and not entitled to be assumed true.” Id.
21   While Vedder identifies numerous parts of the Estimating
22   Wizard allegedly copied by the defendants, no factual
23   allegations support its legal conclusions. Thus, dismissal
24   of the infringement claim was appropriate.
25
26   3.   Other Claims
27
28        Sherman Act § 2 states “[e]very person who shall
29   monopolize, or combine or conspire with any other person or
30   persons, to monopolize . . . shall be deemed guilty of a
31   felony.” 15 U.S.C. § 2. A claim of monopolization may be
32   based on either concerted or unilateral action. See
33   American Needle, Inc. v. National Football League, 560 U.S.
34   183, 130 S.Ct. 2201, 2208 (2010). Vedder’s monopolization
35   claim, however, relates only to the defendants’ alleged
36   conspiracy. (Am. Compl. ¶ 18)(“Defendant Xactware has
37   monopolized the market . . . by the defendants’ conspiracy,
38   agreement, and concerted action . . . .). As discussed
39   above, however, the complaint fails to adequately plead the
40   existence of an agreement. Thus, Vedder’s Sherman Act § 2
41   claim cannot stand.
42
43        Vedder’s other claims ultimately rest on the existence
44   of a conspiracy or trademark infringement. Because the
45   complaint insufficiently pleads those claims, there is no
46   need to examine them further.
47

                                  5
 1        For the foregoing reasons, and finding no merit in
 2   Vedder’s other arguments, we hereby AFFIRM the judgment of
 3   the district court.
 4
 5                              FOR THE COURT:
 6                              CATHERINE O’HAGAN WOLFE, CLERK
 7
 8
 9
10




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