Miami Intern. Realty v. Town of Mt. Crested Butte, Civ. A. No. 83-K-25.

• Decision Date: 12 April 1985
• Docket Number: Civ. A. No. 83-K-25.
• Citation: 607 F. Supp. 448
• Parties: MIAMI INTERNATIONAL REALTY COMPANY, Plaintiff, v. TOWN OF MT. CRESTED BUTTE, COLORADO; Crested Butte Mountain Resort, Inc.; James Dean, Richard Paynter, Robert Pino; Tim Currin; and Ptarmigan Associates, Inc., Defendants.
• Court: U.S. District Court — District of Colorado

607 F. Supp. 448

MIAMI INTERNATIONAL REALTY COMPANY, Plaintiff, v. TOWN OF MT. CRESTED BUTTE, COLORADO; Crested Butte Mountain Resort, Inc.; James Dean, Richard Paynter, Robert Pino; Tim Currin; and Ptarmigan Associates, Inc., Defendants.

Civ. A. No. 83-K-25.

United States District Court, D. Colorado, Civil Division.

April 12, 1985.

COPYRIGHT MATERIAL OMITTED

B. Lawrence Theis, William E. Walters, III, Walters & Theis, Denver, Colo., for plaintiff.

Richard P. Slivka, David L. Dain, Bosworth & Slivka, P.C., Hugh A. Burns, Phillip S. Finga, Burns & Figa, P.C., Denver, Colo., Fritz Russell, Russell, Angelo & Wright, P.C., Gunnison, Colo., for defendants.

MEMORANDUM OPINION AND ORDER

KANE, District Judge.

On February 14, 1983, plaintiff amended its original complaint to include claims for monetary and injunctive relief for violation of federal antitrust laws. The complaint alleges that defendants conspired to prohibit plaintiff from engaging in the business of selling condominium time shares. Plaintiff's factual allegations are more fully detailed in my earlier orders of January 23, 1984 (579 F.Supp. 68) and July 11, 1984. A pre-trial conference was held before United States Magistrate Schauer on June 24, 1984 and trial to a jury is set commencing February 26, 1986. With the exception of discovery relating to time-sharing and damages experts all preparatory matters have been completed and the case is ready for trial. Defendants now move to dismiss all antitrust damage claims and to strike plaintiff's damage expert.

In response to the Supreme Court's opinion in Community Communications Co., Inc. v. City of Boulder, Colorado, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982), Congress enacted the Local Government Antitrust Act of 1984 exempting local government entities from damage remedies under section 4, 4A or 4C of the Clayton Act. P.L. 98-544, October 24, 1984, effective September 24, 1984. As the Senate Judiciary Committee noted, before City of Boulder "it was generally assumed" that the state action antitrust immunity doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943) applied to both states and their local units of government. Report of the Senate Committee on the Judiciary on the Local Government Antitrust Act, S.Rep. No. 593, 98th Cong., 2d Sess. 1 (1984). City of Boulder, however, provided that for the actions of local government to be subject to state action immunity those actions must be in furtherance of clearly and expressly mandated state policy. 455 U.S. at 51, 102 S.Ct. at 840. The Senate Committee concluded that:

in many instances, the practical impact of Boulder and its predecessor Lafayette v. Louisiana Power & Light Co., 532 F.2d 431 (1976) has been to paralyze the decision-making function of local government. The threat of antitrust treble damage actions has caused local officials to avoid decisions that may touch on the antitrust laws even when such decisions have involved critical public services.

Report of the Senate Committee on the Judiciary, supra at 3. Moreover, the Senate Committee concluded that "regardless of whether a local government has violated the antitrust laws, it is inappropriate to assess damages which ultimately must be borne by the taxpayers." Id. at 6-7.

In response to these concerns Section 3(a) of the Local Government Antitrust Act provides specific exemption for any "local government, or official or employee thereof acting in an official capacity." Section 4(a) provides exemption from any "claim against any person based on any official action directed by a local government, or official or employee thereof acting in an official capacity." Evaluation of the applicability of the Act is a matter of first impression in this district and the Tenth Circuit.

Normally, an act is effective from its date of passage and applies to all litigation pending on that date. See Bradley v. School Bd. of City of Richmond, 416 U.S. 696, 711-16, 94 S.Ct. 2006, 2016-18, 40 L.Ed.2d 476 (1974).¹ However, section 4(b) provides that subsection 4(a) "shall not apply with respect to cases commenced before the effective date of the Act September 24, 1984". The exemption provided local government entities themselves is a bit more expansive. Section 3(b) provides:

Subsection (a) shall not apply to cases commenced before the effective date of this Act unless the defendant establishes and the court determines, in light of all the circumstances, including the stage of litigation and the availability of alternative relief under the Clayton Act, that it would be inequitable not to apply this subsection to a pending case. In consideration of this section, existence of a jury verdict, district court judgment, or any stage of litigation subsequent thereto, shall be deemed to be prima facie evidence that subsection (a) shall not apply.

Although the complaint was amended to include antitrust claims more than 19 months before the effective date of the Act, defendants Crested Butte Mountain Resort (CBMR), Town of Mt. Crested Butte and James Dean, Richard Paynter and Robert Pino, all town officials, seek exemption from damage remedies pursuant to section 3(a). Plaintiff responds first, that CBMR is not a local government entity. Thus, any exemption afforded Crested Butte Mountain Resort would arise under section 4 rather than section 3. As such, no retroactive exemption would apply to CBMR. Plaintiff argues second, that the facts in this case compel a finding that the section 3(a) exemption should not be retroactively applied to claims raised before the effective date of the Act.

Damage Immunity of CBMR

Crested Butte Mountain Resort argues that it is a local government, or official or employee thereof subject to the damage exemptions of section 3(a). On face examination, CBMR is no more than a private entity. CBMR tries to fit under the provisions of section 3(a) by arguing that most of the allegations against it relate to the actions of its employees, Larkin and McDaniel, while they were serving as members of the Crested Butte town council. Thus, CBMR argues that it must fall under the ambit of section 3(a) because its agents were acting in an official capacity. Plaintiff draws an apt analogy by suggesting that CBMR's attempt to fit under section 3(a) is akin to trying to hide an elephant in the courtroom. Independent of any of the actions taken by Larkin or McDaniel while serving on the town council, plaintiff alleges numerous actions taken by CBMR in an attempt to drive plaintiff out of business. These allegations include: engaging in formal and informal discussions with town representatives to prepare plans to curtail plaintiff's business, obtaining favorable treatment from the town in the passage and enforcement of ordinances intentionally directed at plaintiff's business, cancelling a pre-purchase lift ticket contract with an affiliate of plaintiff, and effecting the arrest and prosecution of plaintiff's representatives. Moreover, a private individual or entity cannot become a public entity by virtue of engaging in a conspiracy with the public entity. It is beyond cavil that CBMR can be liable for conspiring with a town official in violation of antitrust laws without assuming the cloak of the damage exemption of a governmental entity.

Antitrust immunity might extend to a private entity engaging in anticompetitive activity with a state agency which is immune under the Parker doctrine. See I P. Areeda & D. Turner, Antitrust Law ¶ 212b (1978). The Local Government Antitrust Act of 1984 extends such immunity to private entities acting under the direction of a local government. The Act, however, draws a clear distinction between the local government entity subject to the provisions of section 3 and the private entity subject to the provisions of section 4. Arguably, CBMR could be exempt from damage remedies by virtue of the provisions of section 4(a) which precludes damage claims "against a person based on any official action directed by a local government or official or employee thereof acting in an official capacity." However, section 4(b) specifically precludes the application of section 4(a) exemptions in cases such as this one which were commenced before the effective date of the Act.

Application of Local Government Immunities to a Pending Case

The other movants, Town of Mt. Crested Butte, Dean, Paynter and Pino, all fall within the ambit of the exemptions in section 3(a). Section 3(b) leaves the determination of retroactive application of the exemption in section 3(a) to the sound discretion of the trial court. The Act directs that the court consider "all the circumstances" in determining whether damage exemptions are appropriately applied in pending cases. Only two factors, however, are specifically enumerated in the text of the statute and the conference committee report. Local Government Antitrust Act of 1984, Conference Report, H.R.Rep. No. 1158, 98th Cong., 2d Sess. 3-4 (1984) U.S. Code Cong. & Admin.News 1984, 4602, 4626-4627. The specific reference to the stage of the litigation and the availability of other relief under the Clayton Act indicates that these factors are paramount. The explicit language of the statute, however, provides that these two factors are not exclusive. See also 130 Cong.Rec. H12176, H12186-7 (daily ed. October 11, 1984).²

The statutory language and legislative history also provide that the stage of the litigation is the most significant factor. If litigation filed before the effective date of the act has advanced to a jury verdict or district court judgment, "a local government defendant would need compelling equities on its side to justify the application of section 3(a) to the pending case." H.R.Rep. No. 1158 at 3-4, U.S.Code Cong. & Admin.News 1984, at 4627. Conversely, the Act's exemptions should be applied if a case is filed shortly after September 24, 1984. As the colloquy between two floor managers, Congressmen Seiberling...