Auraria Student Hous. at the Regency, LLC v. Campus Vill. Apartments, LLC

• Decision Date: 15 December 2016
• Docket Number: No. 15-1352,15-1352
• Citation: 843 F.3d 1225
• Parties: Auraria Student Housing at the Regency, LLC, a Colorado Limited Liability Company, Plaintiff–Appellee, v. Campus Village Apartments, LLC, a Delaware limited liability company, Defendant–Appellant. National Association of College and University Business Officers; Board of Governors for the Colorado State University System; Board of Trustees for Colorado Mesa University; Board of Trustees for the Colorado School of Mines; Board of Trustees for Western State Colorado University, Amici–Curiae.
• Court: U.S. Court of Appeals — Tenth Circuit

843 F.3d 1225

Auraria Student Housing at the Regency, LLC, a Colorado Limited Liability Company, Plaintiff–Appellee,

v. Campus Village Apartments, LLC, a Delaware limited liability company, Defendant–Appellant.National Association of College and University Business Officers; Board of Governors for the Colorado State University System; Board of Trustees for Colorado Mesa University; Board of Trustees for the Colorado School of Mines; Board of Trustees for Western State Colorado University, Amici–Curiae.

No. 15-1352

United States Court of Appeals, Tenth Circuit.

December 15, 2016

Daniel D. Domenico, Kittredge LLC, Denver, Colorado (Michael J. Hofmann, Bryan Cave, LLP, Denver, Colorado, on the briefs), for Defendant–Appellant.

Thomas P. McMahon (G. Stephen Long with him on the briefs), Jones & Keller, P.C., Denver, Colorado, for Plaintiff–Appellee.

Cynthia H. Coffman, Attorney General, Frederick R. Yarger, Solicitor General, Glenn E. Roper, Deputy Solicitor General, Jonathan P. Fero, Assistant Solicitor General, Office of the Attorney General for the State of Colorado, Denver, Colorado, and Marc L. Fleischaker and Brian D. Schneider, Arent Fox LLP, Washington, D.C., filed an amicus brief on behalf of National Association of College and University Business Officers.

Before KELLY, McKAY, and McHUGH, Circuit Judges.

McHUGH, Circuit Judge.

I. INTRODUCTION

This appeal is from a jury verdict finding Campus Village Apartments, LLC (Campus Village) in violation of § 2 of the Sherman Antitrust Act based on its participation in a conspiracy with the University of Colorado–Denver (UCD) to monopolize commerce. Auraria Student Housing at the Regency, LLC (Regency) sued Campus Village after UCD instituted a residency requirement which forced a significant portion of its freshmen and international students to live at Campus Village. Like Regency, Campus Village is an apartment complex located outside the boundaries of the UCD Campus. But the University of Colorado Real Estate Foundation (CUREF) is the sole member of Campus Village, and CUREF operates Campus Village for the benefit of the University of Colorado system. Although Regency alleges that UCD participated in the conspiracy, it named only Campus Village as a defendant in this litigation.

On appeal, Campus Village argues principally that the district court erred by not requiring Regency to define the "relevant market" Campus Village allegedly conspired to monopolize. Specifically, it claims recent Supreme Court and Tenth Circuit authority mandate that plaintiffs identify both the relevant geographic and product markets to recover under § 2, including for conspiracy-to-monopolize claims. We agree.

Decades ago, this court determined—based on its reading of the Supreme Court's decision in United States v. Yellow Cab Co ., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947) —that § 2 conspiracy claims did not require proof of a relevant market. Salco Corp. v. Gen. Motors Corp. , 517 F.2d 567, 576 (10th Cir. 1975) (Salco ). Intervening Supreme Court precedent, however, including Spectrum Sports, Inc. v. McQuillan , 506 U.S. 447, 113 S.Ct. 884, 122 L.Ed.2d 247 (1993) (Spectrum Sports ), provides new guidance for reading Yellow Cab and its progeny. With the benefit of this direction, we depart from our decision in Salco , and instead hold that plaintiffs must define the relevant market in every § 2 claim. This is true even though a showing of the defendants' power in that market may not be required in some instances.

Regency failed to identify the relevant market here, and Campus Village moved for summary judgment on that basis, among others. Constrained by our decision in Salco , the district court held that § 2 conspiracy claims do not require proof of a relevant market, and it denied Campus Village's motion. Ultimately, the case went to the jury and it rendered a verdict in Regency's favor. Because Regency failed to define the relevant market, we vacate the jury verdict. However, in light of our departure from Salco , and with the additional guidance provided herein, we remand to the district court to provide Regency with an opportunity to prove the relevant market. We also affirm the district court's rulings on Campus Village's statute of limitations and state action immunity arguments.

II. BACKGROUND

A. Factual History

The facts in this case are largely undisputed. On September 27, 2004, CUREF developed a list of "areas of responsibility" in connection with the planned development of student housing for UCD students. One of the "Expectations of the University" was that it would "[e]nact[ ] a residency requirement for international students and freshmen from outside the Denver metro area." Two months later, CUREF and UCD entered into a Letter Agreement in which UCD agreed, in more concrete terms, to "institute a residency requirement for all full-time enrolled freshmen at the [UCD] downtown Denver, Colorado campus who reside outside of a radius of 50 miles from the [UCD] downtown Denver, Colorado campus." This residency requirement provided security for the bond offering used to fund the construction of Campus Village, thereby making the offering more appealing to investors. And the parties agree the requirement increased out-of-state student enrollment. It is disputed, however, whether the residency requirement was instituted for the purpose of increasing out-of-state freshmen enrollment, retention rates, and student quality of life, or whether it was done purely to assist in the issuance of the bonds.

The residency requirement was officially approved on November 22, 2005, to be instituted in Fall 2006.¹ Although the Letter Agreement made mention of a 50–mile exemption for freshmen students, the requirement as promulgated was slightly different. It instead stated: "[UCD] requires all first time [UCD] freshmen under the age of 21 not living with their parent(s) or legal guardian(s), to live in the Campus Village Apartments." But it provided a few exemptions, including for "undergraduate student[s] enrolled for less than 10 credit hours per semester." UCD continued to enforce this requirement and in a 2008 Operating Agreement, "[UCD] agree[d] to continue the implementation and enforcement of its policy requiring first time freshman and international students to reside in the Apartments, subject to the agreed upon exceptions." And UCD specifically advertised that "students may NOT live at the Inn at Auraria or the Regency," two apartment complexes within close proximity to Campus Village.

In 2010, UCD made some changes to the residency requirement. In particular, there was no longer an exemption for students enrolled in fewer than 10 course hours, thereby increasing the number of freshmen students required to live at Campus Village.

B. Procedural History

Regency filed its complaint on October 14, 2010, alleging Campus Village conspired with UCD to monopolize commerce, in violation of § 2 of the Sherman Antitrust Act. Regency also raised other claims for relief under Colorado state law, including civil conspiracy and interference with business relations. In turn, Campus Village filed a motion to dismiss under Fed. R. Civ. P. 12(b)(6), arguing among other things that Regency's § 2 claim was barred by state action immunity due to UCD's involvement in the project. The district court denied Campus Village's motion to dismiss. Campus Village filed an immediate appeal, which this court dismissed for lack of jurisdiction because it was not from a final order. Auraria Student Hous. at the Regency, LLC v. Campus Vill. Apartments, LLC , 703 F.3d 1147 (10th Cir. 2013).

Campus Village then filed a motion for summary judgment, characterizing the residency requirement as "simply a tying arrangement," whereby certain consumers of college education at UCD also were required to purchase housing from Campus Village. Campus Village also argued that Regency failed to show harm to competition, as required under § 2, because it had "no evidence that UCD ... has market power [in the higher education market] or operates in a non-competitive market." Regency denied the challenged conduct was a tying arrangement, arguing that "[a] key difference is that tying requires a relevant market; conspiracy to monopolize does not." The district court denied the motion, treating Campus Village's tying arrangement argument as an unsupported "affirmative defense." Campus Village filed a motion to reconsider, stressing again that the focus of § 2 is on harm to competition, regardless of the nature of the conduct, and that it had "met its burden on summary judgment by pointing out that the plaintiff has no evidence of market power." The district court denied this motion as well, and the case proceeded to trial.

After the close of Regency's case, Campus Village submitted an oral motion under Rule 50(a) for judgment as a matter of law. The district court granted the motion as to Regency's state-law claims, but it denied the motion as to Regency's § 2 claim. In particular, the court found Regency had submitted sufficient evidence of Campus Village's intent to monopolize. It also ruled Regency's § 2 claim was not barred by the four-year statute of limitations, as the "continuing conspiracy" exception applied to reset the limitations period at the beginning of each school year. The court then submitted the case to the jury and it returned a verdict against Campus Village, awarding Regency $3,261,000.00 in damages, which were trebled under 15 U.S.C. § 15(a). Campus Village then filed a motion under Rule 50(b), raising sufficiency of the evidence arguments and renewing its argument that the suit was barred by state action immunity and the statute of limitations. After the district court denied this motion, Campus Village appealed. Exercising jurisdiction under 28 U.S.C. § 1291, we vacate the jury verdict and remand.

III. RELEVANT MARKET REQUIREMENT

The district court denied Campus Village's motion for summary judgment despite Regency's...