Hanover 3201 Realty, LLC v. Vill. Supermarkets, Inc.

• Decision Date: 12 November 2015
• Docket Number: No. 14–4183.,14–4183.
• Citation: 806 F.3d 162
• Parties: HANOVER 3201 REALTY, LLC, Appellant v. VILLAGE SUPERMARKETS, INC.; Abc Corporations 1–10 (names being fictitious and unknown but described as those corporations associated with Village that assisted with and promoted the use of sham litigations and anti-competitive acts); John Does 1–10 (names being fictitious and unknown but described as those individuals associated with Village that assisted with and promoted the use of sham litigations and anti-competitive acts); Hanover and Horsehill Development LLC.
• Court: U.S. Court of Appeals — Third Circuit

806 F.3d 162

HANOVER 3201 REALTY, LLC, Appellant
v.
VILLAGE SUPERMARKETS, INC.; Abc Corporations 1–10 (names being fictitious and unknown but described as those corporations associated with Village that assisted with and promoted the use of sham litigations and anti-competitive acts); John Does 1–10 (names being fictitious and unknown but described as those individuals associated with Village that assisted with and promoted the use of sham litigations and anti-competitive acts); Hanover and Horsehill Development LLC.

No. 14–4183.

United States Court of Appeals, Third Circuit.

Argued: June 18, 2015.
Opinion Filed: Nov. 12, 2015.

806 F.3d 166

John M. Agnello, Esq., James E. Cecchi, Esq., Lindsey H. Taylor, Esq. [Argued], Carella Byrne Cecchi Olstein Brody & Agnello, Roseland, NJ, Attorneys for Appellant, Hanover 3201 Realty, LLC.

Anthony Argiropoulos, Esq. [Argued], Thomas Kane, Esq., Epstein Becker & Green, One Gateway Center, Newark, NJ, David W. Fassett, Esq., Arseneault & Fassett, Chatham, NJ, Attorneys for Appellees, Village Supermarkets, Inc. and Hanover and Horsehill Development LLC.

OPINION OF THE COURT

FUENTES, Circuit Judge, with whom AMBRO, Circuit Judge, joins as to Parts II.A.2, II.B, and II.C, and GREENBERG, Circuit Judge, joins as to Part II.A.

Hanover 3201 Realty, LLC (“Hanover Realty”) signed a contract with Wegmans to develop a supermarket on its property in Hanover, New Jersey. The agreement required Hanover Realty to secure all necessary governmental permits and approvals prior to breaking ground. Village Supermarkets, Inc. (“ShopRite”) owns the local ShopRite. Once ShopRite and its subsidiary Hanover and Horsehill Development LLC (“H & H Development”) (collectively, “Defendants”) caught wind that Wegmans might be entering the market, they filed numerous administrative and court challenges to Hanover Realty's permit applications. Believing these filings were baseless and intended only to frustrate the entry of a competitor, Hanover Realty sued Defendants for antitrust violations. Hanover Realty alleged that Defendants attempted to restrain the market for full-service supermarkets as well as the market for full-service supermarket rental space. The District Court dismissed the suit, holding that Hanover Realty did not have antitrust standing because it was the wrong plaintiff—it was not a competitor, consumer, or participant in the restrained markets and thus did not sustain the type of injury the antitrust laws were intended to prevent.¹

We conclude that, with respect to the claim for attempted monopolization of the market for full-service supermarkets, the District Court took too narrow a view of antitrust injury. Hanover Realty can establish that its injury was “inextricably

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intertwined” with Defendants' anticompetitive conduct. However, as to the claim for attempted monopolization of the market for rental space, the District Court correctly found no standing because Hanover Realty does not compete with Defendants in that market. We also hold that Hanover Realty has sufficiently alleged that the petitioning activity here was undertaken without regard to the merits of the claims and for the purpose of using the governmental process to restrain trade. As such, Hanover Realty can demonstrate that Defendants are not protected by Noerr–Penningtonimmunity because their conduct falls within the exception for sham litigation. Accordingly, we will affirm in part, vacate in part, and remand to the District Court for further proceedings.

I. BACKGROUND

Plaintiff Hanover Realty is a real estate developer and the owner of a plot of land in Hanover, New Jersey.²In July 2012, Hanover Realty entered into a lease and site-development agreement with Wegmans for the purpose of constructing a “full-service supermarket.” App. 66. These types of supermarkets, in contrast to their local grocery store counterparts, provide customers with a “one-stop shopping” experience. App. 67. Full-service supermarkets supply not only traditional groceries, but also additional amenities, including prepared foods to go, on-site dining options, wine and liquor, specialty products, and other services such as pharmacies, banks, and fitness centers. The site-development agreement placed the burden on Hanover Realty to obtain all necessary governmental permits prior to beginning construction. If Hanover Realty was unable to secure the required permits within two years of the agreement, Wegmans could walk away from the deal.

Defendant ShopRite is the proprietor of 26 ShopRite supermarkets in New Jersey, including a ShopRite in Hanover that is about two miles away from the site of the proposed Wegmans. The ShopRite opened in November 2013 and replaced the previous one in Morris Plains, which has since closed. Defendant H & H Development, a wholly-owned subsidiary of ShopRite, owns the property on which the Hanover ShopRite sits, and leases the land or building to ShopRite. ShopRite and H & H Development have the same decision makers. Hanover Realty alleges that the ShopRite in Hanover is the only full-service supermarket operating in the greater Morristown area.

Once news broke that Wegmans was coming to town, Defendants launched a petitioning campaign designed to block Hanover Realty from obtaining the permits and approvals it needed to proceed with the project. We describe these filings here.

First,Hanover Realty applied for a Flood Hazard Area Permit (“Flood Permit”) from the New Jersey Department of Environmental Protection (“Environmental Department”). After Hanover Realty received the permit, ShopRite (on behalf of itself and H & H Development) submitted an appeal to the Environmental Department requesting an adjudicatory hearing and seeking an order that would vacate the permit. Defendants asserted that they had standing to bring the appeal because the then-existing ShopRite in Morris Plains would be “detrimentally impacted” by the competition from the Wegmans. App. 74. Over the next five months, Defendants

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submitted additional documents to the Environmental Department, including an objection that Hanover Realty failed to comply with relevant notice requirements and an amended request for an adjudicatory hearing.

About a month after Hanover Realty filed its amended complaint in this action, the Environmental Department issued an order denying Defendants' request for a hearing. It first found that ShopRite had no standing, explaining that “[c]ourts have consistently held that proximity or any type of generalized property right shared with other property owners such as recreational interests, traffic, views, quality of life, and property values are insufficient to demonstrate a particularized property right required to establish third party standing for a hearing.” App. 157. ShopRite's “generalized property rights” and its claim of “greater competition” from the proposed Wegmans were not enough to show that it was an aggrieved party. The Environmental Department also evaluated the substance of Defendants' arguments and found them without merit.

Second,Hanover Realty submitted a multi-permit application to the Environmental Department seeking various wetlands approvals (“Wetlands Permit”) for the Wegmans project. An ecological consulting firm sent a letter to the Environmental Department on behalf of Defendants raising various challenges to this permit. One objection was that Hanover Realty's notice to neighboring landowners was “technically deficient.” App. 77. In response to this objection, and as “required” by the Environmental Department, Hanover Realty corrected this “administrative error” the next week and submitted a revised application. App. 169. The ecological consultant also voiced its concern that the site of the proposed Wegmans was a potentially suitable habitat for certain endangered species, including the Indiana bat.³A few days later, Defendants submitted another letter to the Environmental Department, this time requesting a meeting to discuss the Wetlands Permit and “strongly urg[ing]” it to “diligently and prudently” review the permit and not act with “haste” in granting approval. App. 78. In the following months, Defendants' ecological consultant complained to the United States Fish and Wildlife Service about the Wetlands Permit. In one email to the Wildlife Service, the consulting firm praised itself for “manag[ing] to delay the issuance of the [Wetlands] approvals based on a technicality” and said that its substantive objections “may delay things a bit longer.” App. 80. Hanover Realty responded to Defendants' multifaceted challenge with its own submissions, explaining why, in its view, each objection was unsubstantiated. Moreover, Hanover Realty alleges that Defendants knew the wetlands at issue are not federally regulated waters, but nonetheless contacted the Wildlife Service to add friction to the review process.

The Environmental Department issued Hanover Realty its requested Wetlands Permit, subject to various conditions. One such condition required Hanover Realty to conduct a survey for the presence of Indiana bats prior to construction.⁴After the Environmental Department issued the

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permit, Defendants submitted a request for an adjudicatory hearing to challenge the approval.⁵

Third,the tract of land owned by Hanover Realty has been the subject of several contracts and...