Marriott Hotels of Atlanta v. Heart of Atlanta Motel

• Citation: 232 F. Supp. 270
• Decision Date: 10 July 1964
• Docket Number: Civ. A. No. 8832.
• Parties: MARRIOTT HOTELS OF ATLANTA, INC., a Delaware Corporation, Plaintiff, v. HEART OF ATLANTA MOTEL, INC., a Georgia Corporation, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

232 F. Supp. 270

MARRIOTT HOTELS OF ATLANTA, INC., a Delaware Corporation, Plaintiff, v. HEART OF ATLANTA MOTEL, INC., a Georgia Corporation, et al., Defendants.

Civ. A. No. 8832.

United States District Court N. D. Georgia, Atlanta Division.

July 10, 1964.

Nall, Miller, Cadenhead and Dennis, Atlanta, Ga., for plaintiff.

Sutherland, Asbill & Brennan, Atlanta, Ga., for defendants.

MORGAN, District Judge.

The defendants herein have filed a motion to dismiss plaintiff's amended complaint under Rule 12(b), Federal Rules of Civil Procedure, on the grounds that the complaint fails to state a claim upon which relief can be granted. The plaintiff, Marriott Hotels of Atlanta, Inc., a Delaware corporation, filed this complaint against Heart of Atlanta Motel, Inc., a Georgia corporation; Moreton Rolleston, Jr.; and Allen G. Webb. The action is based on Section 4 of the Clayton Act,¹ which permits any person injured in his business by reason of a violation of the antitrust laws to sue for treble damages. The substantive provisions allegedly violated by defendants are Sections 1 and 2 of the Sherman Act,² which provide that persons who conspire to restrain trade, monopolize trade, or attempt to or conspire to monopolize trade are guilty of a criminal act.

The original complaint contained the following allegations:

Plaintiff has purchased a certain described piece of real property from the Housing Authority of the City of Atlanta, and plans, contracts, and construction have been entered upon for the erection of a motor hotel on the property. The corporate defendant owns and operates one motel in the City of Atlanta with approximate gross business of $800,000.00 per annum; the individual defendants are principal stockholders and directors of the corporate defendant, and defendant Rolleston is the president of the corporate defendant. The corporate defendant's motel uses, is used in, and substantially affects interstate commerce. Plaintiff's motel will be a serious threat of competition to the corporate defendant's motel.

Finally, it is alleged that the defendants caused to be instituted in the Superior Court of Fulton County, Georgia, a "legal proceeding" against the plaintiff and the Atlanta Housing Authority to have the above sale of land to plaintiff set aside and declared null and void. This action was allegedly taken pursuant to a conspiracy among the defendants to restrain trade and commerce, was an effort to maintain defendants' present monopoly of interstate trade and commerce in the motel and hotel business in Atlanta, was an attempt to monopolize said trade and commerce, and was part of a conspiracy among defendants to monopolize said trade and commerce.

Plaintiff claims to have suffered $1,000,000.00 damages, and seeks judgment for $3,000,000.00, attorneys' fees, and costs.

After defendants filed a motion to dismiss, the plaintiff filed an amended complaint repeating the allegations and prayers of the original complaint and alleging, in addition, that defendants conspired not only with each other but also with four other hotel corporations and a partnership in the hotel and motel business in the Atlanta area; that each of the alleged co-conspirators was of a certain specified size and had a certain specified gross annual business; and that the lawsuit instituted by defendants is groundless, as defendants knew or should have known, and defendants were not acting in good faith but were without cause or reasonable grounds to have agreed to have the suit instituted.

There are two questions presented for this Court's determination by the motion of defendants. These questions are:

(1) Can the major hotels, motels, and motor hotels in and around the City of Atlanta, Georgia, which between them have approximately half of the guest rooms which would compete with the proposed motor hotel by the plaintiff Marriott, contract, combine, conspire, and agree between themselves, their officers, agents and employees to restrain plaintiff from engaging in such a competing business, and as a part of said conspiracy, and as a part of an attempt to monopolize and to maintain their present monopoly, cause to be instituted a groundless suit in the State Court of Georgia to seek to have the deed to the property to be used by the plaintiff set aside, without subjecting themselves to liability for triple damages under the Sherman Act? and

(2) Is the operation of major hotels, motels and motor hotels in and around the City of Atlanta, Georgia, a center of trade for the Southeastern United States, subject to the Sherman Act because such activities have a "substantial effect on interstate commerce" as well as because it is a part of, and directly affects, the "continuous and indivisible stream of intercourse between the states"?

As to the first ground of the defendants' motion, defendants argue that the mere filing of a lawsuit by defendants and other competitors in a State Court, as a taxpayer, to test the legality of the dealings between the City of Atlanta Housing Authority and Marriott could not constitute a criminal act in violation of Sections 1 and 2 of the Sherman Act. However, the gravamen of the offense as set out in Marriott's complaint is not the filing of the lawsuit in the State Court, but the offense alleged is the illegal combination, conspiracy and agreement by the defendants and others to keep out the prospective competitor, plaintiff Marriott, in order that the conspirators may continue their monopoly over certain types of tourist accommodations. The filing of the lawsuit in the State Court is alleged to be an instrumentality of their conspiracy. As was stated by Circuit Judge Wilson in the case of Mitchell Woodbury Corporation v. Albert Pick Barth Company, Inc., 1 Cir., 41 F.2d 148, 150:

"That the several acts done in furtherance of the alleged conspiracy by themselves alone do not constitute any federal offense is of no consequence, if the purpose and intent is to restrain interstate commerce. Swift & Co. v. United States, 196 U. S. 375, 395, 25 S.Ct. 276, 49 L.Ed. 518; Binderup v. Pathe Exchange, 263 U.S. 291, 312, 44 S.Ct. 96, 100, 68 L.Ed. 308. The object and intent of the combination determines its legality. Loewe v. Lawlor, 208 U.S. 274, 297, 28 S.Ct. 301, 52 L.Ed. 488, 13 Ann.Cas. 815.

"To what extent it was done, whether to an unreasonable extent, must be left for proof. The plaintiff is not required in its declaration to set forth in detail all the evidence on which it relies. Ballard Oil Terminal Corp. v. Mexican Petroleum Corp., (C.C.A.) 28 F.(2d) 91, 98. It is sufficient, unless objected to for lack of particularity, if it alleges with substantial certainty that a conspiracy existed, that its purpose was to deprive the plaintiff of its interstate business and thus destroy interstate competition; that there was restraint in interstate competition in consequence of the conspiracy, and that the plaintiff was thereby injured."

See also Kellogg Company v. National Biscuit Company, 2 Cir., 71 F.2d 662.

The case of Crummer Company v. DuPont, 223 F.2d 238 (C.A. 5, 1955) cited by the defendants, does not, in this Court's opinion, support the contentions of the defendants.

The second ground of defendants' motion raises the question of whether the hotel industry in Atlanta, Georgia, is subject to the Sherman and Clayton Anti-Trust Acts. Allegations of the amended complaint as to the situation of Atlanta as being a hub of trade and commerce bring this case within the doctrine of the "continuous and indivisible stream of intercourse among the states" enunciated in United States v. South-Eastern Underwriters Association, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440. In the case of United...