Corey v. Look, 80-1447

• Citation: 641 F.2d 32
• Decision Date: 02 March 1981
• Docket Number: No. 80-1447,80-1447
• Parties: 1980-81 Trade Cases 63,793 Joseph L. COREY, Jr., Plaintiff-Appellant, v. Allen M. LOOK et al., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 32

641 F.2d 32

1980-81 Trade Cases 63,793

Joseph L. COREY, Jr., Plaintiff-Appellant, v. Allen M. LOOK et al., Defendants-Appellees.

No. 80-1447.

United States Court of Appeals, First Circuit.

Argued Nov. 5, 1980.

Decided Feb. 13, 1981.

As Amended March 2, 1981.

Herbert N. Goodwin, Boston, Mass., for appellant.

Peter B. Ellis, Boston, Mass., with whom Laurence S. Fordham, Dinah Seiver, and Foley, Hoag & Eliot, Boston, Mass., were on brief for appellee The Woods Hole, Martha's Vineyard and Nantucket Steamship Authority.

Edward W. Farrell, Falmouth, Mass., for appellee Town of Falmouth, Massachusetts, submitting on brief of other appellees.

Before COFFIN, Chief Judge, CAMPBELL and BOWNES, Circuit Judges.

COFFIN, Chief Judge.

This antitrust suit requires us to review a district court dismissal of a complaint on the alternative grounds of failure to state a claim and of defendants' immunity by reason of the state action exemption. We conclude that, under the rigorous standard of review governing us in this appeal, dismissal of the complaint was unwarranted.

I

Appellant sued the town of Falmouth, Massachusetts ("Town") and the Woods Hole, Martha's Vineyard and Nantucket Steamship Authority ("Authority") in April 1977. His complaint, viewed favorably, alleged the following. In March, 1974, the Authority terminated appellant's contract as a parking lot operator. The following month the Town publicly put a town lot formerly leased by the Authority up for open lease negotiations. Appellant sought to lease the lot, and provided the Town with parking lot revenue information that it promised it would keep confidential. However, the Authority as parking operator/land consumer conspired with the Town as land supplier to eliminate appellant as a competitor in the parking supply market. This was evidenced by the Town's favoritism to the Authority: the Town told the Authority about the confidential information, and it allowed the Authority to use the lot prior to any formal lease. The conspiracy was also shown in the conduct of the lease negotiations. The Authority initially sought to match each of appellant's offers for the lot, but eventually it abandoned this effort. Consequently appellant's final offer was more attractive than the Authority's. During the negotiations, a representative of the Authority met with the Town to inform it that it had to accept the Authority's offer. In a decision without an objective or rational foundation the Town awarded the lease contract to the Authority. After rejecting appellant's attempt to lease the town lot and thus compete as a parking supplier, the Town continued to attack appellant when he attempted to compete by using another lot located in Falmouth. The complaint did not elaborate on the factual basis for the claimed later attack. ¹

The Authority and the Town each answered after obtaining extensions of time. The defendants then propounded interrogatories to appellant, which he answered after several extensions of time. His answers claimed that the Town had refused appellant's requests that the negotiations proceed by sealed public bid. They also elaborated on appellant's post-lease attempts to compete. Appellant stated that when he leased a lot from Penn Central Railway, the Town had required him to obtain a special permit for parking operation. He said that it had not required the Authority to obtain such a permit when the Authority had previously leased this very lot. The permit requirement assertedly injured appellant by its delay in issuance and by its two special restrictions: it barred appellant from advertising by sign and it severely restricted the times at which appellant was allowed to charge customers using his facilities. ² Appellant further claimed that these requirements had never been applied to the Authority when it had leased this lot.

In addition to requiring the special permit, appellant's answers asserted that the Town blocked access to appellant's lot at peak times, and the Authority used appellant's lot without permission or compensation when parking overflowed its own lots. The Town refused to act when appellant requested aid against the Authority's trespasses and appellant was driven out of business.

The Authority moved for 12(b)(6) dismissal in September, 1978. The Town followed suit in February, 1979. Appellant moved for an enlargement of time, citing the complexity of the issues and the hospitalization of his lawyer's mother. Several further delaying motions were made and granted. Briefing on the motions was completed in April, 1979. In December, 1979, appellant moved to amend his complaint to add facts from his interrogatory responses. The amendments further claimed that the Town had allowed the Authority to park cars on school-owned property but had denied appellant similar rights; that the Town had violated the law when it refused to put the contract to public bid; and that the Authority had increased all parking fees after the appellant was forced out of business. The district court held a hearing in January, 1980, and the next day the appellees filed a one-sentence opposition to appellant's motion to amend. They claimed the amendment was untimely and irrelevant, but asserted no prejudice from delay.

In March, 1980, the district court granted judgment for the defendants. It dismissed appellant's antitrust claim on alternate grounds: failure to state a claim and state action immunity. It did not refer to appellant's pending motion to amend his complaint.

Appellant then moved under Rule 59 to alter the judgment to allow him to amend his complaint. The court "denied (the motion) by reason of the fact that the proposed amendment would make no difference in the outcome of the case". The court gave no other reason for its decision. Appellant appealed from the denial of the Rule 59 motion, but not from the earlier adverse judgment.

II

Both appellees' motion to dismiss the original complaint and appellant's motion to amend that complaint were simultaneously before the district court when it first ruled. Although the court dealt with these matters at different times, the justification for the latter decision necessarily implicated the correctness of the former. In addition, the court evidently intended that its two holdings be considered jointly since it handled the amendment motion so as to preserve for appellant an "ample record for the Court of Appeals." We thus treat this appeal as concerning both of the district court's actions.

A

The district court held that the simple fact that the appellant lost in the competition for an exclusive contract meant that the complaint did not state an antitrust claim. This reading of the complaint emphasizes the innocuous and ignores the ominous. Appellant's claims are not confined to the plaints of one whose bid was not good enough to dominate the auction. See Klor's v. Broadway-Hale Stores, 359 U.S. 207, 212, 79 S.Ct. 705, 709, 3 L.Ed.2d 741 (1959) (distinguishing classic boycott from exclusive dealership and from single trader's refusal to deal). ³ Nor do they depict the case of governmental bodies choosing to avoid the marketplace altogether and allocate resources according to some other decision mechanism. Rather they assert that the Authority appellant's competitor in the parking service market acted in concert with the Town a supplier of parking lot space to deprive the appellant of access to supplies crucial to a parking operation: parking lot space. The two allegedly accomplished this by subverting normal commercial bidding to exclude appellant and by hampering through severe regulations his ability to use land he obtained from other suppliers. All this is said to have been undertaken in order to eliminate appellant as a competitor. On its face, this amounts to "a 'concerted refusal to deal' with a disfavored purchaser or seller." Barry v. St. Paul Fire & Marine Insurance Co., 555 F.2d 3, 7 (1st Cir. 1977), aff'd sub nom. St. Paul Fire & Marine Insurance Co. v. Barry, 438 U.S. 531, 98 S.Ct. 2923, 57 L.Ed.2d 932 (1978). Although not all activity that might be described as a boycott is per se illegal, 555 F.2d at 8 n. 4, nothing in appellant's complaint would confine appellees' behavior to a "benign", id., category. ⁴

The district court's reliance on Parmalee Transportation Co. v. Keeshin, 292 F.2d 794 (7th Cir.), cert. denied, 368 U.S. 944, 82 S.Ct. 376, 7 L.Ed.2d 340 (1961), for the proposition that losing out in a competition among lease proposals does not constitute a violation of the Sherman Act merits some comment beyond pointing out the overlooked and ominous portions of the complaint. In Parmalee, a provider of transfer services between railroad terminals alleged that a competitor, Keeshin, bribed the then chairman of the Interstate Commerce Commission to pressure a group of railroads to accept Keeshin's contract proposal. A divided panel of the court affirmed a dismissal of the complaint for failure to state a Sherman Act claim. Its twin pillars, which in retrospect seem inapposite, were Apex Hosiery Co. v. Leader, 310 U.S. 469, 60 S.Ct. 982, 84 L.Ed. 1311 (1940), involving a strike by organized labor, ⁵ and Eastern Railroad Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961), involving railroad lobbying against truckers to obtain favorable legislation. While we see little similarity between the actions in Parmalee and "political activity", 365 U.S. at 137, 81 S.Ct. at 529, or the "right to petition", id. at 138, 81 S.Ct. at 530, we see none at all in the case at bar. ⁶

We need not decide whether additional federal antitrust counts may be stated by the complaint since this error alone mandates reversal.

B

The district court also erred in concluding that the alleged actions of the Authority and the Town were exempt from the antitrust laws. Appellees must meet two standards before they can claim state action exemption: "First, the...