Johnson v. Soundview Apartments Housing Development Fund Co.

647 F. Supp. 1410, 1986 U.S. Dist. LEXIS 17620
CourtDistrict Court, S.D. New York
DecidedNovember 17, 1986
DocketNo. 81 Civ. 4803 (JES)
StatusPublished
Cited by2 cases

This text of 647 F. Supp. 1410 (Johnson v. Soundview Apartments Housing Development Fund Co.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Johnson v. Soundview Apartments Housing Development Fund Co., 647 F. Supp. 1410, 1986 U.S. Dist. LEXIS 17620 (S.D.N.Y. 1986).

Opinion

SPRIZZO, District Judge.

Plaintiffs brought an action alleging inter alia that a mandatory meal plan established by defendants in connection with certain government subsidized housing units constituted an illegal tying arrangement in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1. See Third Amended Complaint (“Complaint”) at ¶¶ 49-56.1 Defendants moved to dismiss or, in the alternative, for summary judgment contending that the mandatory meal plan at issue did not constitute an illegal tying arrangement. The defendants further contended that, in any event, they were entitled to an immunity for any alleged antitrust violation because its mandatory meal plan had been approved by an agency of the federal government.

In an Opinion and Order rendered from the bench, the Court rejected defendants’ argument that the mandatory meal plan did not, as a matter of law, constitute an illegal tying arrangement within the meaning of the antitrust laws. See July 23, 1982 Transcript (“Tr.”) at 33.2 In denying defendants’ motion, the Court concluded that the plaintiffs adequately pleaded all of the requirements for an illegal tying arrangement. See Tr. at 31-34.3 Thus, plaintiffs alleged that the defendants have substantial market power in the tying product’s market, i.e. the market for rental housing in Southern Westchester County, New York.4 In addition, the plaintiffs alleged that this market power enabled defendants to coerce those who sought the tying product, rental housing, to purchase the tied product, the mandatory meal plan. See Complaint at ¶¶ 52-53. The Court further [1412]*1412concluded that the plaintiffs adequately pleaded that there were anticompetitive effects in the tied product market, i.e., the market for foodstuffs in the Soundview area, and that the effects upon interstate commerce were not de minimis or insubstantial. See id. at 1154. Moreover, the Court held that it could not conclude as a matter of law, as it must on a motion for summary judgment, that the plaintiffs could not prove their alleged antitrust claim at trial. Therefore, the defendant’s motion to dismiss or for summary judgment was denied.

The Court also rejected the defendants’ contention that their conduct was exempt from the antitrust laws on the grounds of implied immunity. See Tr. at 84-38. Specifically, defendants argued that their conduct was exempt from the antitrust laws because a handbook of the Department of Housing and Urban Development (“HUD”) permitted mandatory meal plans and because HUD approved the plan at issue in this case. See Defendants’ Memorandum of Law in Support of Motion to Dismiss and/or for Summary Judgment (“Def. Mem.”) at 24-29. The Court found that the defendants had not carried their burden of showing that the mandatory meal plan was specifically authorized or required by an Act of Congress or lawful government regulation and that the mere approval of such a meal plan in a HUD handbook was not sufficient to make out the immunity defense. See Tr. at 38; cf. National Gerimedical Hospital v. Blue Cross, 452 U.S. 378, 388-89, 101 S.Ct. 2415, 2421-22, 69 L.Ed.2d 89 (1981).

Subsequently, the defendants moved for reconsideration of their motion to dismiss or, in the alternative, for summary judgment based upon the decision of the Supreme Court in Jefferson Parish Hospital District No. 2 v. Hyde, 466 U.S. 2, 104 S.Ct. 1551, 80 L.Ed.2d 2 (1984). See Johnson v. Soundview Apts. Housing Development Fund, 585 F.Supp. 559, 561 (S.D.N.Y.1984). The Court denied this motion, rejecting defendants’ contention that that case required a change in the Court’s initial determination. See Johnson v. Soundview Apts. Housing Development Fund, 588 F.Supp. 1381 (S.D.N.Y.1984). Specifically, the Court reaffirmed its earlier holding that “the Court cannot conclude as a matter of law ... that plaintiffs’ claims of impact on the tied market are insubstantial.” See id. at 1383. The Court further noted that the Jefferson Parish case, while possibly representing a trend towards narrowing the scope of the illegal tying arrangement concept, cited with approval prior Supreme Court precedents upon which the Court had previously relied in denying defendants’ initial motion. See e.g., United States Steel Corp. v. Fortner Enterprises, 429 U.S. 610, 620, 97 S.Ct. 861, 867-68, 51 L.Ed.2d 80 (1977); Fortner Enterprises v. United States Steel Corp., 394 U.S. 495, 89 S.Ct. 1252, 22 L.Ed.2d 495 (1969).

On March 27, 1985, the Supreme Court decided the cases of Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24, and Southern Motors Carriers Rate Conference, Inc. v. United States, 471 U.S. 48, 105 S.Ct. 1721, 85 L.Ed.2d 36. In light of those cases the Court requested the parties to address the issue of whether those decisions warranted a reconsideration of the Court’s ruling with respect to the defendant’s antitrust immunity defense.5 Both parties addressed that issue in papers subsequently filed with the Court.

The Court has reviewed those papers and carefully analyzed the cases referred to above. The Court concludes that those cases do not require a change in the Court’s initial ruling and that the defendants’ immunity defense is legally insufficient.

[1413]*1413As plaintiffs’ papers correctly reflect, there are two distinct and separate theories of antitrust immunity which reflect substantially different policy considerations. The state action exemption, which exempts from the antitrust laws anticompetitive conduct pursuant to a clearly articulated state policy, is based upon principles of federalism and state sovereignty. See Hallie, supra, 471 U.S. at 38, 105 S.Ct. at 1716; Parker v. Brown, 317 U.S. 341, 350-51, 63 S.Ct. 307, 313-14, 87 L.Ed. 315 (1943). While Hallie and Southern Motor Carriers liberalize and clarify the scope of the state action immunity doctrine, they have no applicability to the question raised in this case, whether immunity should exist as a matter of Congressional intent. Indeed, the Supreme Court in Southern Motor Carriers, supra, explicitly distinguished between the two theories of antitrust immunity, noting that a less stringent test is appropriate for state action immunity than for immunity based on a federal law to avoid the “kind of interference with state sovereignty ... that ... Parker was intended to prevent.” See 471 U.S. at 57-58 n. 21, 105 S.Ct. at 1727 n. 21 (ellipsis in original) (quoting P. Areeda & D. Turner, Antitrust Law ¶ 214, p. 88 (1978)).

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Bluebook (online)
647 F. Supp. 1410, 1986 U.S. Dist. LEXIS 17620, Counsel Stack Legal Research, https://law.counselstack.com/opinion/johnson-v-soundview-apartments-housing-development-fund-co-nysd-1986.