Mardirosian v. American Institute of Architects

• Decision Date: 25 June 1979
• Docket Number: Civ. A. No. 77-1297.
• Citation: Mardirosian v. American Institute of Architects, 474 F.Supp. 628 (D. D.C. 1979)
• Parties: Aram H. MARDIROSIAN, Plaintiff, v. The AMERICAN INSTITUTE OF ARCHITECTS, and Seymour Auerbach, Defendants.
• Court: U.S. District Court — District of Columbia

474 F. Supp. 628

Aram H. MARDIROSIAN, Plaintiff, v. The AMERICAN INSTITUTE OF ARCHITECTS, and Seymour Auerbach, Defendants.

Civ. A. No. 77-1297.

United States District Court, District of Columbia.

June 25, 1979.

COPYRIGHT MATERIAL OMITTED

Edward Greensfelder, Jr., Gerald P. Greiman, Washington, D. C., for plaintiff.

Hogan & Hartson, James A. Hourihan, Ernest B. Abbott, Washington, D. C., for defendant American Institute of Architects.

OPINION

SIRICA, District Judge.

This case presents an antitrust challenge to the ethical canons of a professional organization. Plaintiff Aram H. Mardirosian, an architect, filed the action in July 1977 after being suspended from membership in the American Institute of Architects (AIA). Mardirosian seeks treble damages against both the AIA, which found him guilty of violating two of its ethical standards, and Seymour Auerbach, the architect who filed charges of ethical misconduct with the AIA. Plaintiff also seeks injunctive relief against the AIA. An amended complaint was filed on May 18, 1978.¹

Count I of the amended complaint alleges that Standard 9 of the AIA's Code of Ethics constitutes an unreasonable restraint of trade in violation of sections 1 and 3 of the Sherman Act, 15 U.S.C. §§ 1 & 3 (1976). It is stated solely against the AIA. Count II alleges that both defendants² violated the Sherman Act by enforcing AIA Ethical Standards 9 and 10 against the plaintiff, and by utilizing unreasonable and unfair disciplinary procedures to do so. Plaintiff seeks treble damages and injunctive relief under each of the first two counts. The final Sherman Act claim is stated in Count III, which alleges a continuing antitrust violation through the maintenance and enforcement of Standard 9 and requests a permanent injunction against its utilization. Counts IV and VI state common law tort claims against the AIA; Count V does the same for defendant Auerbach.

The action is presently before the Court on Mardirosian's motion for partial summary judgment confined to the issue of the AIA's liability on Count I.³ The motion has been extensively briefed and has been argued to the Court. For the reasons that follow, the Court has concluded that there is no genuine dispute⁴ over any fact material to a resolution of the question of the AIA's liability under Count I and that Mardirosian is entitled to a partial summary judgment as a matter of law.

I.

A. The National Visitor Center Project

The dispute between the two architects in this case arose in connection with the provision of architectural services for the alteration and refurbishing of historic Union Station in Washington, D.C., as the National Visitor Center.⁵ Pursuant to the National Visitor Center Facilities Act of 1968, 40 U.S.C. §§ 801-831 (1976), the Secretary of the Interior was authorized to enter into agreements with the railroad owners of Union Station for the alteration of the building to provide facilities for a National Visitor Center and to construct a new railroad passenger station and parking facilities. 40 U.S.C. §§ 801 & 802 (1976). Congress appropriated funds for the project, and provided that the United States would lease the renovated Union Station facilities from the owners.

In 1968, the federal government, through the Secretary of the Interior, reached an agreement with the railroad owners pursuant to the legislation. The following year, the railroads contracted with defendant Auerbach for the provision of basic architectural services on the project. Under the contract, which was later amended, Auerbach was to prepare design and contract documents for the Visitor Center, the parking garage, and the new railroad station.

The authorizing legislation and the agreements between the railroad owners and the federal government contemplated that the government would monitor the work of the railroads' architects, engineers, and contractors to assure that it was in the government's interest and that costs were kept within proper limits. Accordingly, in September 1972, the government contracted with plaintiff Mardirosian for performance of certain consultative services with respect to the design and construction of the Visitor Center and parking garage. His responsibilities included oversight and coordination of the architect, the contractor, and the numerous private and government entities involved in the project.

In 1973, additional governmental involvement was authorized by statute. In that year, Congress amended the Act to authorize the Secretary of the Interior to "supplement" the alterations and construction being performed by the railroad owners by himself undertaking such activities. Pub.L. No. 93-62, 87 Stat. 146, 40 U.S.C. § 802(c) (1976). As a result, in 1974, the Secretary and the railroads executed an agreement whereby the government assumed direct responsibility for further construction on the Visitor Center (often referred to as project 1) and the railroads were relieved of any further responsibility therefor. By April 1975, the point at which the formal construction bids which had been solicited on Auerbach's design plans were opened, the government, through the Secretary of the Interior, was completely in control of the Visitor Center project, including Auerbach's contract for architectural services.⁶

That contract contained a detailed termination provision under which Auerbach could be discharged either for cause or for the convenience of the "owners." As amended in April 1974, the critical provision of Auerbach's contract stated: "The Owners may, by written notice to the Architect, terminate this contract in whole or in part at any time, either for the Owners' convenience or because of the failure of the Architect to fulfill his obligations under this contract." Plaintiff's Motion for a Preliminary Injunction, exhibit A-12, at 5.⁷

The choice of termination method was to result in very different impacts on Auerbach. If the termination were for the owners' convenience, the contract provided a formula for computing full compensation for architectural services performed to the termination date. But if the termination were for cause, no compensation rights were provided, id., thereby limiting the architect to periodic payments and reimbursements received prior to termination.

By April 1975, the same month in which the Visitor Center construction bids were opened, the responsible government officials had in fact decided to terminate the portion of Auerbach's contract relating to the Visitor Center; they requested Mardirosian to undertake such additional design and construction coordinating services as were necessary to complete the project by July 4, 1976. Although Auerbach learned unofficially of the termination decision in mid- or late April 1975, his contract was not formally terminated as to project 1 (the Visitor Center) until July 3, 1975.⁸ At that point, Auerbach was terminated under the "convenience of the Owners" clause of his contract and fully paid for his work on project 1 in the amount of approximately $700,000; he remained under contract on the parking garage and the new railroad station projects. Mardirosian's contract with the government was amended on July 29, 1975, to include design and construction management work on project 1.

B. The AIA's Disciplinary Actions

The American Institute of Architects, of which both Mardirosian and Auerbach were members, is the principal American professional organization of architects. Founded in 1857, it is organized as a membership corporation and comprises at least 27,500 licensed architects throughout the United States.⁹

To persons engaged in the business and profession of architecture, membership in the AIA is a valuable asset which enhances their ability to compete for and obtain architectural business. Members of the AIA normally use the insignia "AIA" following their names to denote membership. About half of the registered architects in the United States do, however, engage in the business of architecture without the benefit of AIA membership.

The AIA carries on a wide variety of activities at the national level, including devising and publishing handbooks, forms, codes, and guidelines relating to the practice of architecture and the marketing of architectural services; promulgating and enforcing ethical standards; and publishing a monthly magazine and semi-monthly newsletter.

Each applicant for membership in the AIA receives a copy of the AIA's Standards of Ethical Practice, and must sign an application form which contains a declaration of compliance with the standards. The AIA enforces compliance by adjudicating charges of disciplinary violations brought by member architects or by state or local chapters of the AIA. Its adjudicative body is currently called the National Judicial Committee (formerly the National Judicial Board).

The AIA's 1977 Code of Ethics states that AIA members "shall not knowingly associate in practice with other architects who violate or intend to violate this Code." The corresponding paragraph of the 1978 Code provides that an architect "shall not knowingly practice with or be employed by others who act contrary to this code in the normal course of business." According to the affidavit of the AIA Secretary filed in support of the AIA opposition to plaintiff's motion, both these provisions were intended "to prohibit AIA members from joining with non-AIA members and firms in a deliberate effort to get around the requirements of the Code of Ethics." Lawrence Affidavit, para. 4. They do not, however, prohibit such association merely on the basis of past ethical violations. Id.

Since at least 1963, the AIA has maintained, in one form or another, an ethical standard which in May 1975 was known as Standard 9. The version of Standard 9 in effect in May 1975 provided:

An architect shall not attempt to obtain, offer to undertake or accept a commission for which the architect knows another legally qualified individual

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