Opdyke Inv. Co. v. City of Detroit, 86-1843

• Citation: 883 F.2d 1265
• Decision Date: 25 August 1989
• Docket Number: No. 86-1843,86-1843
• Parties: 1989-2 Trade Cases 68,717 OPDYKE INVESTMENT COMPANY, Plaintiff-Appellant, v. CITY OF DETROIT, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 1265

883 F.2d 1265

1989-2 Trade Cases 68,717

OPDYKE INVESTMENT COMPANY, Plaintiff-Appellant, v. CITY OF DETROIT, Defendant-Appellee.

No. 86-1843.

United States Court of Appeals,

Sixth Circuit.

Argued May 6, 1988.

Decided Aug. 25, 1989.

William J. Lamping (argued), Erickson and Lamping, Bloomfield Hills, Mich., for plaintiff-appellant.

Gerald Warren, Detroit, Mich., Michael G. Vartanian (argued), Robert W. Powell, for defendant-appellee.

Before KRUPANSKY and NELSON, Circuit Judges, and TODD, District judge. ^*

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. Secs. 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 plaintiff's 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 Sec. 4 of the Clayton Act, 15 U.S.C. Sec. 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 Opdyke's Pontiac Township site. Norris also had discussions with Detroit about moving 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. Notwithstanding the parallel between these provisions and those contained in Opdyke's letter of intent dated March 11, 1977, Opdyke argues that the provisions "are prima facie evidence of a contract, combination and conspiracy to restrain and monopolize trade in the arena market."

II

Opdyke brought a breach of contract action against Norris in state court during the latter part of 1977, ultimately recovering a substantial money judgment against Norris. The City of Detroit was never joined as a defendant in the state court proceeding, but on August 1, 1978, before that case had gone to trial, Opdyke brought the present federal antitrust action against both the city and the Norris group. The antitrust complaint contained allegations of an unlawful contract, combination and conspiracy to restrain trade in violation of Sec. 1 of the Sherman Act (15 U.S.C. Sec. 1) and monopolization and attempt to monopolize in violation of Sec. 2 of the Sherman Act (15 U.S.C. Sec. 2). Invoking the federal court's pendent jurisdiction, the complaint also asserted a state law claim for tortious interference with contractual and economic relationships between Opdyke and Norris. Treble damages were sought under Sec. 4 of the Clayton Act (15 U.S.C. Sec. 15) in an amount totaling almost $212 million, ¹ and the complaint contained a prayer for preliminary and permanent injunctive relief as well.

Opdyke chose not to press its request for injunctive relief acknowledging that the injunctive aspect of this case might become moot with the passage of time. At a hearing held before the district court on September 8, 1978, the court noted that the request for injunctive relief was presumably "making [Detroit's] bond attorneys nervous." Opdyke's counsel responded that "[w]e do ask for injunctive relief as an alternative prayer but at this point in time I have no intention and no purpose to move the Court for that relief." The judge warned counsel that "the further along the line the City of Detroit goes in getting involved with bonds and construction the almost impossible position you are going to get yourself into." Plaintiff's counsel responded, "I understand and I am willing to take that risk and there might be, there will come a time in the near future when the injunctive aspect of our case will become moot because it would be something the Court wouldn't seriously entertain."

At a hearing held on December 15, 1978, similarly, Opdyke's counsel told the court that "the principal thrust of our lawsuit is damages." Counsel expressly reaffirmed the statements made at the September 8 hearing ("that is exactly what I say today"), and noted that "[i]t may be that by the time we are able to convince the court that there is a violation of the law ... it will really be...