Ehlinger & Associates v. Louisiana Architects Ass'n, Civ.A. 96-2413.

• Decision Date: 05 January 1998
• Docket Number: No. Civ.A. 96-2413.,Civ.A. 96-2413.
• Court: U.S. District Court — Eastern District of Louisiana
• Parties: EHLINGER & ASSOCIATES, et al. v. LOUISIANA ARCHITECTS ASSOCIATION, et al.

989 F.Supp. 775

EHLINGER & ASSOCIATES, et al. v. LOUISIANA ARCHITECTS ASSOCIATION, et al.

No. Civ.A. 96-2413.

United States District Court, E.D. Louisiana.

January 5, 1998.

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Earl S. Eichin, Jr., O'Neil, Eichen, Miller, Saporito & Harris, New Orleans, LA, George Frazier, Lemle & Kelleher, New Orleans, LA, for Plaintiffs.

James Rodney Chastain, Jr., Breazeale, Sachse & Wilson, Baton Rouge, LA, Marshall G. Weaver, Arthur, Arthur S. Patron, Jr., Henican, James & Cleveland, Metairie, LA, for Defendant Louisiana Architects Ass'n.

Daniel Lund, Brett A. North, Montgomery, Barnett, Brown, Read, Hammond & Mintz, New Orleans, LA, for Defendant American Institute of Architects.

ORDER AND REASONS GRANTING DEFENDANTS' MOTIONS FOR SUMMARY JUDGMENT

VANCE, District Judge.

This matter is before the Court on motions for summary judgment filed by defendants American Institute of Architects and Louisiana Architects Association. For the reasons set forth below, the motions are GRANTED.

I. BACKGROUND

Plaintiff, Ladd Ehlinger, a Louisiana-licensed architect, and his firm, Ehlinger & Associates ("E & A"), brought this suit against the Louisiana Architects Association ("LAA") and the American Institute of Architects ("AIA") asserting violations of the federal and state antitrust laws and the Louisiana Unfair Trade Practices Act. Ladd Ehlinger also claims that defendants defamed him. The gravamen of plaintiffs' complaints concerns the failure of the Louisiana Architects Selection Board ("LASB"), an entity authorized by law to select architectural firms on state projects, to award E & A state contracts with the frequency they assert was appropriate.¹ Plaintiffs complain that the LAA, consisting of one-half of the licensed architects in the State of Louisiana, controls the selection of architects by the Louisiana Architects Selection Board. They claim that the LASB "disproportionately favors" two categories of architectural firms: (1) those purchasing professional liability and other forms of insurance from or through the LAA and its executive director, Richard Thevenot; and (2) those LAA members who have been or will be "of service" to the LAA. In response to discovery, plaintiffs assert that those LAA members who are "of service" to the LAA include LAA "insiders," who are defined as persons who held LAA offices, served on important LAA committees, won honor awards, or contributed to the LAA's political action committee. Plaintiffs assert that they suffered an almost total loss of state work after they decided not to buy insurance from the LAA and after Mr. Ehlinger resigned from the LAA and its New Orleans chapter. Plaintiffs challenge the LASB selection practices as subjective and lacking qualification-based standards.

Plaintiffs assert that their exclusion from state contracts amounts to a group boycott by the LAA in violation of Section 1 of the Sherman Act. Additionally, plaintiffs claim that the LAA conditioned receipt of state contracts on the purchase of insurance, which they claim is an illegal tie-in, also in violation of Section 1 of the Sherman Act. Plaintiffs further claim that the LAA monopolized the market for architectural services provided to the State of Louisiana in violation of Section 2 of the Sherman Act by manipulating the voting process of the LASB and abusing its "right to have a majority of LASB" members. In their briefs, plaintiffs claim that the LAA used the asserted boycott and tying arrangement to maintain its monopoly under Section 2.

Plaintiffs have not alleged that the AIA directly participated in the conduct charged against the LAA. Rather, plaintiffs seek to impose liability on the AIA on a theory of agency, asserting that the LAA is a component of the AIA and that plaintiffs believe that the LAA represented and acted for the AIA, that the AIA oversaw the LAA's conduct, and that plaintiffs relied on the AIA to rectify the LAA's improper actions toward them. Plaintiffs assert that they complained to the AIA of the LAA's conduct and that the AIA failed to correct it.

Plaintiffs claim that the same conduct violated the Louisiana Unfair Trade Practices statute. Further, Mr. Ehlinger asserts that the defendants defamed him because the minutes of the LASB contained statements that he falsified applications for state work.

Both the LAA and the AIA have filed motions asserting that plaintiffs' case should be dismissed on a number of grounds. Specifically they assert that plaintiffs' claims are prescribed under federal and state law, that the LASB's actions are immune from antitrust attack under the state action doctrine, that any effort by the LAA to influence the LASB is protected by the Noerr-Pennington doctrine, or that, if the LAA and the LASB are one and the same, as plaintiffs allege, that the LAA likewise is protected by the state action doctrine. Defendants also assert that plaintiffs cannot prove an antitrust violation in any event. Defendants further state that plaintiffs have failed to assert a defamation claim. Finally, the AIA claims that there is no basis for holding it liable under a theory of agency liability. Because the Court determines that the state action doctrine disposes of the federal and state antitrust law claims, as well as the Louisiana Unfair Trade Practices Act claims, it will not reach all of the alternative arguments for dismissal.² The Court does find an absence of any basis supporting a theory of agency liability on the part of the AIA and that the defamation claim is deficient as a matter of law.

II. SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate when there is no genuine issue as to any material facts, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). Factual controversies are resolved in favor of the non-moving party only if there is an actual controversy, that is, when both parties have submitted evidence of contradictory facts. Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir.1994) (en banc). The court must determine whether there are any genuine issues of material facts which preclude judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

III. FEDERAL ANTITRUST CLAIMS

Plaintiffs allege that the LAA controls the LASB and that they are one and the same. See Pls.' Opp. at 41. Indeed, although plaintiffs have not sued the LASB, the essence of their antitrust and unfair trade practices claims against the defendants is the failure of the LASB to award plaintiffs architectural contracts on state projects to the extent plaintiffs believe would have occurred but for defendants' allegedly anticompetitive behavior. Because these allegations clearly challenge how the state board's selection process operates, they necessarily implicate the state action doctrine announced by the United States Supreme Court in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943). In Parker, the United States Supreme Court held that restraints on competition imposed by "state action or official action directed by a state" were immune from the antitrust laws based on considerations of federalism and state sovereignty. Id. at 351, 63 S.Ct. at 314. The Court must reach the issue of whether the LASB's selection process is immune from antitrust challenge before it can determine whether the LAA can be held liable for its members' conduct in influencing or carrying out the Board's policies or benefitting from its selection process.

Although the state action doctrine originally applied to actions by the state itself, the doctrine has been extended under certain circumstances to anticompetitive activities of subordinate governmental units of a state, such as municipalities, state agencies, and other political subdivisions. In City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978), the United States Supreme Court held that immunity will attach to the conduct of such subordinate governmental units when they are implementing a "clearly articulated and affirmatively expressed" state policy to displace competition with regulation or monopoly public service. Id. at 410, 98 S.Ct. at 1135. The Court further held that for state policy to be "clearly articulated," subordinate state actors need not show a specific, detailed legislative authorization of the anticompetitive governmental activity, if the authority granted to the governmental unit suggests the legislature contemplated that the disputed action would be taken. Id. at 415, 98 S.Ct. at 1138.

The Supreme Court shed more light on the "clear articulation" requirement in Town of Hallie v. City of Eau Claire, 471 U.S. 34, 40, 105 S.Ct. 1713, 1717, 85 L.Ed.2d 24 (1985). In Hallie, neighboring townships challenged the City of Eau Claire's refusal to provide sewer treatment to the towns, while offering to provide the same services to individual homeowners if they voted to have their homes annexed by the city and to use the city's sewerage collection and transportation services. The townships charged that the city was using its monopoly over sewerage treatment to gain a monopoly over sewerage collection and transportation services. The city claimed immunity under the state action doctrine, asserting that the conduct had been authorized by state legislation granting the city the right to construct and operate sewerage systems, to define sewerage districts, and to decide whether to service unincorporated areas. The Supreme Court held that the city's anticompetitive conduct was immune under the state action doctrine because it was "a foreseeable result" of the city's authority to refuse service to unincorporated areas. Id. at 42, 105 S.Ct. at 1718. Accord City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 372-73,...