Opdyke Investment Company v. City of Detroit

883 F.2d 1265, 1989 U.S. App. LEXIS 12781, 1989 WL 97736
CourtCourt of Appeals for the Sixth Circuit
DecidedAugust 25, 1989
Docket86-1843
StatusPublished
Cited by27 cases

This text of 883 F.2d 1265 (Opdyke Investment Company v. City of Detroit) is published on Counsel Stack Legal Research, covering Court of Appeals for the Sixth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Opdyke Investment Company v. City of Detroit, 883 F.2d 1265, 1989 U.S. App. LEXIS 12781, 1989 WL 97736 (6th Cir. 1989).

Opinion

DAVID A. NELSON, Circuit Judge.

Prior to 1978 it was widely believed in keeping with the “state action” exemption from antitrust liability announced in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), that the federal antitrust laws were not intended to apply to municipalities. In City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978), however, the Supreme Court held that the state action doctrine does not automatically exempt cities from the operation of the antitrust laws. The Court also held that a municipal body is a “person” within the contemplation of those laws. And in Community Communications Co. v. City of Boulder, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982), the Court held further that the state action doctrine does not protect a municipality in the exercise of “home rule” powers granted under a state constitution.

The decisions in City of Lafayette and City of Boulder led to enactment of the Local Government Antitrust Act of 1984, codified at 15 U.S.C. §§ 34-36. That statute — described by Congress as an act to “clarify” the application of the Clayton Act to the official conduct of local governments — established as a general rule that antitrust damages are not recoverable from any local government. This provision was made inapplicable to lawsuits commenced before September 24, 1984, however, “unless the defendant establishes and the court determines, in light of all the circumstances ... that it would be inequitable not to apply [the prohibition against recovery of damages] to a pending case.”

The case at bar, a “pending case” under the statute, is an antitrust action that was filed against the City of Detroit on August 1, 1978 — four months after the announcement of the Supreme Court’s decision in City of Lafayette. The complaint alleged that the city and the owners of the Detroit Red Wings, a professional hockey team, had begun violating the antitrust laws, to the plaintiffs injury, “on a date prior to August 3, 1977.... ” The dispute arose out of the city’s efforts to keep the Red Wings in Detroit, rather than suffering a move of the team to a stadium that the plaintiff proposed to build on land it owned in Pontiac, Michigan. The relief sought included an award of treble damages under § 4 of the Clayton Act, 15 U.S.C. § 15.

In 1986, before the case went to trial, the district court (Richard J. Suhrheinrich, J.) determined that in light of all the circumstances it would be inequitable not to let Detroit have the benefit of the statutory prohibition against damage awards. The action was therefore dismissed, any possibility of injunctive relief having been overtaken by events. The main question presented on appeal is whether the district court’s balancing of the equities constituted reversible error. Having concluded that it did not, and having concluded further that the application of the 1984 Act did not violate the United States Constitution, we shall affirm the dismissal of the action.

I

The home games of the Detroit Red Wings used to be played in the Olympia Stadium, a facility located in Detroit and owned by Olympia Stadium Corporation. Like the Detroit Hockey Club, which held the National Hockey League franchise for the Red Wings, Olympia Stadium was a subsidiary of Norris Grain Company. (As did the district court, we shall refer to the three corporations as “Norris,” or “the Norris group.”)

In the spring of 1976 representatives of plaintiff Opdyke Investment Company, a Michigan partnership, met with Norris to discuss the possibility of developing a new sports arena for the Red Wings on Op-dyke’s Pontiac Township site. Norris also had discussions with Detroit about moving *1267 the Red Wings to a new riverfront arena to be built by the city in downtown Detroit.

In a letter sent to Detroit Mayor Coleman Young on February 14, 1977, Norris announced that it would not join the city in the proposed riverfront arena. Under date of March 11, 1977, Opdyke sent Norris a letter of intent purporting to memorialize an agreement in principle under which, subject to the obtaining of satisfactory financing, Norris would be the exclusive operator of an 18,000 seat stadium to be constructed in Pontiac. Norris would move the Red Wings to the new stadium, and would agree further “not to use, lease, or sell the present Olympia Stadium for a use which may be competitive with the new arena. ...”

Norris never signed the letter of intent. On April 1, 1977, however, Norris announced at a press conference that the Red Wings would be moved to an arena which, pursuant to an agreement with Opdyke, would be built in Pontiac with the proceeds of tax exempt revenue bonds.

Pontiac Township had authorized incorporation of an economic development corporation as a financing vehicle for the proposed stadium, and on April 4, 1977, the township adopted a recommendation of the corporation for the approval of the stadium project. Opdyke tried to get the Michigan National Bank of Detroit to underwrite the stadium bonds that were to be issued by the corporation, but on April 10, 1977, the bank declined to do so. Opdyke’s complaint attributed the bank’s decision to a conspiracy with the City of Detroit.

On April 29, 1987, the City of Detroit filed a declaratory judgment action in state court seeking a determination that Pontiac Township and its economic development corporation had violated Michigan law by pirating business from Detroit — a municipality which, unlike Pontiac, was economically depressed. A decision dismissing the lawsuit was appealed, and the pendency of the litigation forestalled any bond sale. Opdyke’s complaint characterizes the city’s suit as a “sham.”

Moving forward with plans for construction of its own stadium, Detroit resumed negotiations with the Norris group. “It appears,” the district court found, “that Norris told the City that it did not have a binding agreement with plaintiff and was free to contract.” Norris’ representation was backed up by an agreement to indemnify the city against any judgment predicated on a determination that Norris had broken a written agreement regarding the proposed Pontiac stadium.

On August 3,1977, Norris signed a letter agreement with Detroit committing itself to move the Red Wings to a new 19,000 seat riverfront stadium to be built by the city for lease to Norris at what Opdyke calls a “bargain rate.” The August 3 agreement provided that all of the Red Wing’s home games would be played at the new riverfront facility. The agreement further provided that the existing Olympia Stadium would not be utilized in a manner competitive with the city’s facility.

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Bluebook (online)
883 F.2d 1265, 1989 U.S. App. LEXIS 12781, 1989 WL 97736, Counsel Stack Legal Research, https://law.counselstack.com/opinion/opdyke-investment-company-v-city-of-detroit-ca6-1989.