Juster Associates v. City of Rutland, Vt.

• Decision Date: 12 April 1990
• Docket Number: No. 579,D,579
• Citation: Juster Associates v. City of Rutland, Vt., 901 F.2d 266 (2nd Cir. 1990)
• Parties: , 1990-1 Trade Cases 68,999 JUSTER ASSOCIATES and Juster Development Company, Plaintiffs-Appellants, v. CITY OF RUTLAND, VERMONT, William Finard, Damian Zamias, Steven Mosites, the Zamias Group, Inc., Rutland Associates, Finard-Rutland Realty Limited Partnership, Rutland-Zamias Limited Partnership, Finard-Zamias Associates, and Finard-Zamias Rutland Development Company, Defendants-Appellees. ocket 89-7747.
• Court: U.S. Court of Appeals — Second Circuit

Page 266

901 F.2d 266

58 USLW 2621, 1990-1 Trade Cases 68,999

JUSTER ASSOCIATES and Juster Development CompanyPlaintiffs-Appellants, v.CITY OF RUTLAND, VERMONT, William Finard, Damian ZamiasSteven Mosites, the Zamias Group, Inc., Rutland AssociatesFinard-Rutland Realty Limited Partnership, Rutland-Zamias Limited Partnership, Finard-Zamias Associates, and Finard-Zamias Rutland Development Company, Defendants-Appellees.

No. 579, Docket 89-7747.

United States Court of Appeals Second Circuit.

Argued Jan. 2, 1990.

Decided April 12, 1990.

Alan B. George, Rutland, Vt. (Timothy Martin, Carroll, George & Pratt, Rutland, Vt., of counsel), for Plaintiffs-Appellants.

John H. Shenefield, Washington, D.C. (Peter E. Halle, Michael F. Clayton, Melinda R. Hatton, Morgan, Lewis & Bockius, Washington, D.C., Gary H. Barnes, Robert A. Miller, Jr., Downs, Rachlin & Martin, Burlington, Vt., Barry Waxman, Finard & Co., Burlington, Mass., of counsel), for Defendants-Appellees.

David L. Cleary, Rutland, Vt.(Miller, Cleary & Faignant, Rutland, Vt. of counsel), for Defendant-Appellee City of Rutland.

Before KEARSE and WINTER, Circuit Judges, and HAIGHT, ^*District Judge.

WINTER, Circuit Judge:

This antitrust action pits developers who are seeking permits necessary to begin construction of a new shopping mall against the owners of an existing mall who possess permits allowing them to double its size.The novel aspect of this not-unusual scenario is that the existing mall is accusing its as-yet non-existent competitor of monopolistic practices.

Two New York partnerships that wish to expand their shopping mall in Rutland, Vermont have sued the City of Rutland and several prospective developers of a new shopping center in the Rutland area, claiming that the City and the developers have conspired to restrain trade and to monopolize the market of leasing space in violation of federal antitrust laws, see15 U.S.C. Secs. 1,2,15,26 (1988); that they have tortiously interfered with the plaintiffs' business relationships; and that they have deprived plaintiffs of property interests without due process in violation of 42 U.S.C. Sec. 1983(1982)("Section 1983").Chief Judge Billings granted judgment on the pleadings and dismissed the complaint.Because the complaint fails to allege antitrust injuries and because the defendants are immune from antitrust liability under the Noerr-Pennington doctrine, we affirm.

BACKGROUND

PlaintiffJuster Associates, a New York limited partnership, owns the Rutland Mall in the Town of Rutland, Vermont ("Town of Rutland" or "the Town").PlaintiffJuster Development Company("JDC"), a New York general partnership, proposes to develop an extension of the Rutland Mall with Juster Associates on JDC's adjoining land.Juster Associates and JDC (collectively "Juster") possess the licenses and permits necessary to expand the mall to double its current size.

DefendantCity of Rutland("City of Rutland" or "the City") is a municipal corporation.DefendantFinard-Zamias Associates("FZA") is a developer that has applied for a land-use permit under Vermont law, Vt. Stat. Ann. tit. 10, Secs. 6001-6092(1984)("Act 250"), regarding its proposed development of a regional shopping center in the Town of Rutland adjacent to the City of Rutland.DefendantsWilliam Finard, Damian Zamias, and Steven Mosites are partners in FZA (collectively "the Developers").

Act 250 requires, inter alia, that shopping center developers obtain approval for their projects from the state-appointed District Environmental Commission ("Commission").Vt. Stat. Ann. tit. 10, Sec. 6086(1984& Supp.1989).That the Commission takes into account the views of major municipalities in granting or denying approval to projects is not seriously disputed by the parties.There is also no question that the City of Rutland has played an active role with regard to the Juster and FZA developments in an effort to protect what it perceives as its interests.In fact, the City of Rutland was granted party status before the Commission in proceedings concerning both Juster's and FZA's applications.

On September 27, 1988, the City of Rutland and the Developers, acting through their Vermont corporation Finard-Zamias Rutland Development Company("FZR"), entered into an agreement regarding the Developers' proposed new regional shopping center.The agreement noted the Developers' need for the cooperation and assistance of the City to satisfy various permit requirements of Act 250 and provided for the payment of direct and indirect impact fees by FZR to the City.In particular, FZR agreed to offset any adverse impact on the City's municipal services or tax base through one of three means: (1) payment of impact fees, (2) investment of at least $10 million in non-residential real estate in the City, or (3) adoption, with legislative approval, of a gross-receipts user fee.FZR also agreed to provide other long-term support to the Rutland community including housing assistance, public transportation, regional promotional activities, and cultural and social activities.In return, FZR gained access to the City's water supply and sewage facilities at most-favored customer rates, obtained assurances that the City would improve transportation routes and traffic control around the development, and won the active support of the City in FZA's Act 250 permit proceedings.Finally, FZR agreed to refrain either from actively recruiting tenants for the regional shopping center from the City's central business district or from actively promoting relocation of existing businesses from within the City limits.

Meanwhile, the City had unsuccessfully opposed Juster in Act 250 proceedings regarding Juster's proposed expansion of the Rutland Mall.Juster, which is thus now armed with the necessary permits to expand its mall, filed this complaint on January 23, 1989.On April 17, 1989, the City filed a motion for judgment on the pleadings under Fed.R.Civ.P. 12(c), and the other defendants filed a motion for dismissal under Fed.R.Civ.P. 12(b)(6).The district court granted both motions.Juster appeals.

DISCUSSION

We affirm the judgment for two reasons.First, with regard to the claims under Sections 1and2 of the Sherman Act, the complaint's allegations that Juster has suffered damage because the City of Rutland has subsidized or otherwise aided the Developers in their attempt to build their shopping center do not constitute an antitrust injury.Second, assuming arguendo that the agreement between the City and the Developers restricts competition, they are immune from liability under the antitrust laws.

We apply the usual standard of review that, for purposes of Rule 12(b)(6), we view all facts and allegations in the complaint in the light most favorable to Juster.SeeScheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90(1974).The standard for Rule 12(c) is essentially the same for purposes of the present complaint: the City is entitled to judgment on the pleadings only if it has established "that no material issue of fact remains to be resolved and that [it] is entitled to judgment as a matter of law."5 C. Wright & A. Miller, Federal Practice and ProcedureSec. 1368, at 690(1969);see alsoMacDonald v. Du Maurier, 144 F.2d 696, 700-01(2d Cir.1944)(stating that plaintiff's allegations must be accepted despite the answer's denial of their veracity).

We turn first to Juster's claims under Sections 1and2 of the Sherman Act,15 U.S.C. Secs. 1,2 (1988).To prevail on such claims, Juster must assert "injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendants' acts unlawful."Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 489, 97 S.Ct. 690, 697, 50 L.Ed.2d 701(1977).Juster has not alleged such an injury.

As we stated in R.C. Bigelow, Inc. v. Unilever N.V., 867 F.2d 102, 109(2d Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 64, 107 L.Ed.2d 31(1989), the mere fact of increased competition and reduced profits resulting from an agreement between other parties does not constitute an antitrust injury to a plaintiff.See alsoCargill, Inc. v. Monfort of Colorado, Inc., 479 U.S. 104, 116, 107 S.Ct. 484, 498, 93 L.Ed.2d 427(1986).Juster may thus well be "in a worse position than [it] would have been" had the challenged agreement not been executed, Brunswick, 429 U.S. at 486, 97 S.Ct. at 696, but that fact does not by itself establish an antitrust injury.To hold otherwise would be to "divorce[ ] antitrust recovery from the purposes of the antitrust laws,"id. at 487, 97 S.Ct. at 697, which were "enacted for 'the protection of competition, not competitors,' "id. at 488, 97 S.Ct. at 697(quotingBrown Shoe Co. v. United States, 370 U.S. 294, 320, 82 S.Ct. 1502, 1521, 8 L.Ed.2d 510(1962)(emphasis in original)).

We have applied these principles to a claim similar to Juster's and have found no antitrust injury.In Eastway Constr. Corp. v. City of New York, 762 F.2d 243(2d Cir.1985), cert. denied, 484 U.S. 918108 S.Ct. 269, 98 L.Ed.2d 226(1987), we upheld against an antitrust challenge an agreement between New York City and a private consortium of banks that denied the plaintiff construction company access to low-cost mortgage lending.Stating that the plaintiff had failed even to allege, much less to show, any anticompetitive effects on consumers from its exclusion from the lending market by contract between New York and the consortium, we affirmed the district court's grant of summary judgment to the defendants.Seeid. at 251.

The agreement in this case presents even less of an arguable antitrust injury than did the agreement in Eastway.Here, the agreement between the City and the Developers provided for payment of impact fees by the Developers to the City and support by the Developers for various public projects in the City.This portion of the agreement raises the Developers' costs and...