Gulf Coast Hotel–motel Ass'n v. Miss. Gulf Coast Golf Course Ass'n

• Decision Date: 27 September 2011
• Docket Number: No. 10–60844.,10–60844.
• Citation: 2011 Trade Cases P 77610,658 F.3d 500
• Parties: GULF COAST HOTEL–MOTEL ASSOCIATION and its successor Mississippi Hotel & Lodging Association, Plaintiff–Appellant,v.MISSISSIPPI GULF COAST GOLF COURSE ASSOCIATION; Gulf Hills Golf Club, Incorporated; Great Southern Golf Club, Incorporated; The Pass Christian Isles Golf Club, Incorporated; Sunkist Country Club, Incorporated; SPE Go Holdings, Incorporated, doing business as Great Oaks Golf, a wholly owned subsidiary of Textron Financial Corporation; Dogwood Hills Golf Course, Incorporated; Pacific Life Insurance Company, doing business as The Oaks Golf Club, Defendants–Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

658 F.3d 500

2011-2 Trade Cases P 77,610

GULF COAST HOTEL–MOTEL ASSOCIATION and its successor Mississippi Hotel & Lodging Association, Plaintiff–Appellant,

v.MISSISSIPPI GULF COAST GOLF COURSE ASSOCIATION; Gulf Hills Golf Club, Incorporated; Great Southern Golf Club, Incorporated; The Pass Christian Isles Golf Club, Incorporated; Sunkist Country Club, Incorporated; SPE Go Holdings, Incorporated, doing business as Great Oaks Golf, a wholly owned subsidiary of Textron Financial Corporation; Dogwood Hills Golf Course, Incorporated; Pacific Life Insurance Company, doing business as The Oaks Golf Club, Defendants–Appellees.

No. 10–60844.

United States Court of Appeals, Fifth Circuit.

Sept. 27, 2011.

W.F. Hornsby, III, Mark Vincent Watts (argued), Hornsby Watts, P.L.L.C., Biloxi, MS, Plaintiff–Appellant.James G. Wyly, III, Kyle S. Moran, Heather E. Murphy, Frank W. Trapp (argued), Phelps Dunbar, L.L.P., Jackson, MS, Roland Francis Samson, III, Samson & Powers, P.L.L.C., Gulfport, MS, for Mississippi Gulf Coast Golf Course Ass'n, Great Southern Golf Club, Inc., Pass Christian Isles Golf Club, Inc., Sunkist Country Club, Inc., Dogwood Hills Golf Course, Inc. and Pacific Life Ins. Co. James Bryon Wright, Jr., Biloxi, MS, for Gulf Hills Golf Club, Inc.Matthew G. Lyons, Law Offices of Matt G. Lyons, Ocean Springs, MS, for Sunkist Country Club, Inc.Julie Jarrell Gresham, Taylor B. McNeel (argued), Brunini, Grantham, Grower & Hewes, P.L.L.C., Biloxi, MS, for SPE Go Holdings, Inc.Appeal from the United States District Court for the Southern District of Mississippi.Before WIENER, CLEMENT and ELROD, Circuit Judges.JENNIFER WALKER ELROD, Circuit Judge:

This is an antitrust case involving a dispute between competing programs to sell vouchers for rounds of golf at golf courses along Mississippi's Gulf Coast. The district court granted defendants-appellees motion to dismiss, deciding, in pertinent part, that the plaintiff-appellant had failed to allege the interstate commerce element of a valid claim under the Sherman Act. We now REVERSE and REMAND for further proceedings consistent with this opinion.

I.

The plaintiff-appellant, the Gulf Coast Hotel–Motel Association and its successor Mississippi Hotel & Lodging Association (the “Hotel Association”) is a trade association made up of hotels, motels, other lodging members, and golf courses. As one of its services, the Hotel Association provides a golf voucher program for golf course members of the Hotel Association. Through the program, individual golfers buy vouchers for rounds of golf from hotels or from companies that package golf tours. After the golfer turns in the voucher to the golf course and plays his or her round of golf, the golf course presents the validated voucher to the Hotel Association for payment. The Hotel Association collects the payment from the hotel or golf tour packager, and sends the money to the golf course. The Hotel Association keeps $1 per round of golf as an administrative fee. Thus, the Hotel Association's role is essentially to act as an administrative middle-man for the voucher program.

The complaint alleges in three separate paragraphs that golfers who buy the vouchers come to Mississippi from out-of-state:

The Golf Package Contracts require, in short, that the Hotel Association member golf courses honor the Hotel Association Golf Package Program tickets (i.e., vouchers) presented to them by the patrons of the Hotel Association Lodgings/Golf Packagers for the reserved tee times, in lieu of payment of green and cart fees. These patrons and customers are comprised of out-of-state persons visiting the Mississippi Gulf Coast participating in the voucher program. (emphasis added).

Thus, the Defendant Golf Courses offer higher priced golf rounds to the Hotel Association voucher program, while offering lower rates to the Golf Association voucher program. The Defendant Golf Courses comprise a significant number of courses that are used by out-of-state visitors to the Mississippi Gulf Coast. The Defendant Golf Courses' and the Golf Association's concerted efforts to monopolize the golf package market on the Mississippi Gulf Coast by offering higher rounds to programs other than the Golf Association's program, specifically the Hotel Association's program. (emphasis added).

The Hotel Association and the Golf Association directly compete with each other through their golf package voucher program. The voucher programs of both associations service the region of the Mississippi Gulf Coast. The patrons and consumers who use and purchase the vouchers are comprised of out-of-state residents who visit the Mississippi Gulf Coast. (emphasis added).

The complaint also alleges, without further elaboration, that the voucher program affects interstate commerce.

The defendants-appellees, the Mississippi Gulf Coast Golf Course Association and a number of Mississippi Gulf golf courses (together, the “Golf Association”), are part of a competing voucher program. The Golf Association includes fifteen golf courses on Mississippi's Gulf Coast. Some of those courses were, as of 2002, also members of the Hotel Association's voucher program. In that year, the complaint alleges that the defendant golf courses threatened to withdraw from the Hotel Association's program unless the Hotel Association excluded non-Golf Association golf courses. The Hotel Association refused. In response, the golf course defendants allegedly agreed to an exclusive agreement to work only with the Golf Association voucher program. That exclusive agreement was enjoined as void and unenforceable by the Harris County Chancery Court in 2003. The complaint alleges that in response, the Golf Association and the defendant golf courses began acting in concert to prevent hotels from using the Hotel Association voucher program by providing the Hotel Association with higher quotes than provided to the Golf Association voucher program. Thus, according to the complaint, a golfer looking to buy a voucher for a round of golf on a course that is a member of both the Golf Association and the Hotel Association can buy that voucher for substantially less money from the Golf Association than the Hotel Association.

The Hotel Association filed suit alleging that the Golf Association's decision to discriminate against the Hotel Association voucher program violated sections 1 and 2 of the Sherman Act, section 2 of the Clayton Act, and constituted various state law torts including tortious interference with business relations and contract. The Hotel Association asserted that the District Court had subject matter jurisdiction over its federal antitrust claims pursuant to 15 U.S.C. § 15(a) and 28 U.S.C. § 1331, and supplemental jurisdiction over its state law claims pursuant to 28 U.S.C. § 1367.

The district court advised the Hotel Association that the complaint failed to articulate sufficient factual allegations establishing any affect on interstate commerce. In response, the Hotel Association filed a First Amended Complaint and a Second Amended Complaint (the complaint at issue here). The Golf Association filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).

The district court granted the motion, determining that it lacked subject matter jurisdiction over the Hotel Association's Sherman Act claims. The district court stated that federal subject matter jurisdiction under the Sherman Act and the Clayton Act requires “a showing of some nexus between Defendants' conduct and interstate commerce.” Gulf Coast Hotel–Motel Ass'n v. Miss. Gulf Coast Golf Course Ass'n, No. 1:08–CV–1430, 2010 WL 3168032, at *3 (S.D.Miss. Aug. 10, 2010). The district court first rejected the argument that the voucher sales were directly in interstate commerce.¹ Therefore, the district court went on to consider whether the Hotel Association had properly pleaded a substantial affect on interstate commerce for the purposes of Sherman Act jurisdiction. The district court concluded that the Hotel Association's claims were insufficiently detailed, and therefore dismissed those claims with prejudice. Finally, the district court exercised its discretion to dismiss the Hotel Association's state law claims without prejudice, declining to exercise supplemental jurisdiction over Hotel Association's remaining state law claims. The Hotel Association moved for reconsideration, relying primarily on Cowan v. Corley, 814 F.2d 223 (5th Cir.1987)—a case in which this court reinstated a complaint alleging a Sherman Act claim arising out of a business providing a wrecker service on two major federal highways. Id. at 225. The district court denied the motion for reconsideration. The Hotel Association timely appealed.

II.

The Hotel Association asserts that the district court erred in finding that it lacked subject matter jurisdiction over the Hotel Association's Sherman Act claims. The Hotel Association's position is that its complaint pleaded a sufficient connection to interstate commerce to survive a motion to dismiss. The Golf Association contends in response that the complaint fails because the complaint's “conclusory allegations” did not “sufficiently allege how the Hotel Association's antitrust claims involved interstate commerce.”

This court reviews a decision to dismiss for lack of subject matter jurisdiction de novo, applying the same standards as the district court. See Del–Ray Battery Co. v. Douglas Battery Co., 635 F.3d 725 (5th Cir.2011). Under Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). Rule 8 does not require “detailed factual allegations but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Id. Thus, a complaint will survive a motion to dismiss if it contains “enough facts to state a claim to relief...