Phone Headset Antitrust Trial Begins With Focus on Call Centers

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By Eleanor Tyler

Attorneys for two telephone headset manufacturers began laying out how they sell to big call centers as an unusual antitrust case opened in a Delaware federal courthouse.

GN Netcom Inc. sued Plantronics Inc. for monopolizing the call center market in a case with millions of dollars in potential damages on the line.

GN Netcom says Plantronics sells about eight out of 10 headsets bought by big call centers and customer contact businesses. Plantronics froze GN Netcom out of access to independent distributors, who are necessary for selling to call centers, with their exclusive “Plantronics Only Distributor” (POD) agreements, the plaintiffs alleged ( GN Netcom Inc. v. Plantronics Inc. , D. Del., 12-cv-01318, 10/11/17 ).

Plantronics countered that GN Netcom simply has an inferior sales and business strategy. Rather than just competing in the market, Plantronics says GN Netcom is trying to get a court order to advance its market position.

Both sides picked a jury of seven men and one woman and laid out their opening arguments.

Trials are unusual in this area of the law. Few monopolization cases go to a jury, and very few cases like this one, alleging that exclusive dealing created an unfair advantage, see a jury. The jury has to decide both the monopolization and the exclusive dealing antitrust claims, under the Sherman Act and Section 3 of the Clayton Act.

GN Netcom lawyer Jeffrey Patterson, of K&L Gates in Boston, told the jury that its decision could help define how fair and unfair are defined in the market. “If Plantronics is the best competitor, why use these POD agreements,” he queried.

Plantronics’ lawyer, Russell Hayman of McDermott Will & Emery, cautioned the jury not to award market share to GN Netcom that it couldn’t earn for itself, fair and square.

Unusual Case

One reason this case wound up with a jury is that Plantronics was sanctioned for destroying evidence.

A vice president for sales at Plantronics destroyed emails after the company told him to save all information that might be relevant to the case. The executive’s move had serious negative consequences for Plantronics, even though the parties are still sparring over what was destroyed and whether it would have helped GN Netcom prove its case. Plantronics paid a $3 million sanction for destroying evidence, and it suffered sanctions before the trial that made it harder to narrow the claims against it.

Whether GN Netcom was illegally barred from a market stood out as a possible linchpin in the case. To prove its antitrust claims, GN Netcom must prove that Plantronics’ agreements with independent distributors — which forbid those dealers from buying directly from a competing headset maker and from promoting competing products — kept GN Netcom out.

GN Netcom says it was foreclosed from 47 percent of the market. Patterson told the jury the situation was like trying to play football on only the right side of the field.

Hayman countered that headset makers can and do sell through at least three different channels, not the one channel GN Netcom claims was half foreclosed by POD agreements. By deciding not to sell directly to the customer base and developing personal sales relationships with clients, GN Netcom lost out on a lot of sales by its own mistakes, he argued,

Hayman also said Plantronics’ agreements with dealers can be terminated on 30 days notice for any reason. If GN Netcom had made any POD dealer a better offer, the agreements would have been no impediment to the dealer choosing to sell GN Netcom direct instead. If the POD deales were essentially month to month, Plantronics’ lawyer argued, how could they be effectively foreclosing GN Netcom from the market?

U.S. District Court for the District of Delaware Judge Leonard P. Stark, presiding over the dispute, gave the parties six days to put on their case in a total of 14 hours of evidence per side.

To contact the reporter on this story: Eleanor Tyler in Wilmington, Delaware at etyler@bna.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bna.com

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