Natural Design, Inc. v. Rouse Co.

• Decision Date: 01 September 1983
• Docket Number: No. 58,58
• Citation: 302 Md. 47,485 A.2d 663
• Parties: , 1985-1 Trade Cases P 66,339 NATURAL DESIGN, INC., et al. v. The ROUSE COMPANY et al. ,
• Court: Maryland Court of Appeals

Page 47

302 Md. 47

485 A.2d 663, 1985-1 Trade Cases P 66,339

NATURAL DESIGN, INC., et al. v. The ROUSE COMPANY et al.

No. 58, Sept. Term, 1983.

Court of Appeals of Maryland.

Dec. 28, 1984.

Jack J. Shapiro, Baltimore (William J. Pittler, Baltimore, on brief), for appellants.

Lewis A. Noonberg, Baltimore (John E. Griffith, Jr. and Piper & Marbury, Baltimore, on brief), Robert R. Bowie, Jr., Towson (White, Mindel, Clarke & Hill, Towson, on brief), for appellees.

Argued before MURPHY, C.J., and SMITH, ELDRIDGE, COLE, ^* DAVIDSON, RODOWSKY and COUCH, JJ.

ELDRIDGE, Judge.

The plaintiffs here challenge the granting of the defendants' motions for summary judgment in an action under the Maryland Antitrust Act, Maryland Code (1975, 1983 Repl.Vol.), §§ 11-201 through 11-213 of the Commercial Law Article. The plaintiffs are Natural Design, Inc. (trading as Baycraft), The Raintree Company, and the officers of both corporations. The defendants include the Village of Cross Keys, Inc., which operates a shopping center called "The Village Square," the Rouse Company, which owns the Village of Cross Keys, Inc., ¹ and The Store, Ltd., which rents retail space at The Village Square. Various officers and representatives of Rouse and the owners of The Store, Ltd., are also defendants.

The Store, Ltd., opened at The Village Square in 1965. In February 1973, Rouse and Natural Design, Inc., signed a lease for commercial space at The Village Square for a store to be known as Baycraft. The lease was to expire on May 31, 1979. In 1974, the owners of Baycraft decided to open a store to sell bath related items at The Village Square. Rouse and the Baycraft owners entered a lease for this second store, The Raintree Company, in August 1974. In December 1979, after two brief extensions of the Baycraft lease, Rouse informed the owners that the lease would not be renewed. In April 1980, Raintree received a letter from David L. Moeslein, administrative assistant to the manager of The Village of Cross Keys, informing it that Rouse would not renew Raintree's lease at The Village Square.

The plaintiffs filed this action in the Superior Court of Baltimore City (now part of the Circuit Court for Baltimore City) in November 1980. The plaintiffs charged that, while Baycraft operated at The Village Square, Rouse conspired with The Store, Ltd., to restrain trade at the shopping center by pressuring Baycraft not to compete with The Store, Ltd., and that, in furtherance of this conspiracy, Rouse refused to renew Baycraft's lease. These acts, the plaintiffs contended, violated § 11-204(a)(1) of the Maryland Antitrust Act, which provides that "[a] person may not ... [b]y contract, combination, or conspiracy with one or more other persons, unreasonably restrain trade or commerce ...." The plaintiffs also alleged that Rouse refused to renew both Baycraft's and Raintree's leases in an effort to monopolize trade at The Village Square, in violation of § 11-204(a)(2) of the Act, which provides that "[a] person may not ... [m]onopolize, [or] attempt to monopolize ... any part of the trade or commerce within the State, for the purpose of excluding competition or of controlling, fixing or maintaining prices in trade or commerce." In addition to the antitrust counts, the plaintiffs maintained that the acts of the defendants constituted the tort of malicious interference with the plaintiffs' business. ² The plaintiffs sought treble damages and attorney's fees as provided in § 11-209(b)(4) of the Commercial Law Article for the anti-trust violations, and compensatory and punitive damages for the alleged malicious interference with their business.

After extensive discovery, the trial court granted the defendants' motions for summary judgment on all counts. The plaintiffs took an appeal to the Court of Special Appeals and this Court issued a writ of certiorari before any proceedings in the intermediate appellate court.

On appeal, the plaintiffs contend that disputes as to material facts exist on all issues and that, therefore, the trial court improperly granted the defendants' motions for summary judgment. For the reasons stated below, we hold that summary judgment should not have been granted on the restraint of trade and malicious interference counts but that the defendants were entitled to summary judgment on the monopoly allegations.

I. Restraint of Trade

The purpose of the Maryland Antitrust Act is "to complement the body of the federal law governing restraints of trade." § 11-202(a). That section goes on to state that, in construing the Act, "the courts [are to] be guided by the interpretation given by the federal courts to the various federal statutes dealing with the same or similar matters." Section 11-204(a)(1) of the Maryland Act is essentially the same as § 1 of the Sherman Antitrust Act of July 2, 1890, 26 Stat. 209, as amended, 15 U.S.C. § 1. Thus, decisions of the federal courts interpreting § 1 of the Sherman Act guide us here. See State v. Jonathan Logan Inc., 301 Md. 63, 66-68, 482 A.2d 1 (1984); Quality Disc. Tires v. Firestone Tire, 282 Md. 7, 11, 382 A.2d 867 (1978).

The plaintiffs maintain that legitimate price competition existed at The Village Square between Baycraft and The Store, Ltd., from 1973 to 1975. The plaintiffs claim that, after Rouse began receiving complaints from The Store, Ltd., about Baycraft's price competition and other competitive practices, Rouse commenced pressuring Baycraft to become less competitive with The Store, Ltd. Rouse allegedly insisted that Baycraft stop selling at lower prices the same goods as The Store, Ltd., sold and that Baycraft stop price promoting at The Village Square. The plaintiffs maintain that Rouse also insisted that Baycraft not deal with certain manufacturers with whom The Store, Ltd., dealt and that Baycraft stop offering less expensive limitations of goods which The Store, Ltd., sold. According to the plaintiffs, Rouse threatened that, if Baycraft did not accede to these demands, its lease would not be renewed when it expired in 1979. The plaintiffs further maintain that Rouse's actions were taken in concert with the other defendants, particularly the owners of The Store, Ltd. The plaintiffs also charge that Baycraft's lease at The Village Square was not renewed as a result of this concert of action.

The defendants respond that all of the actions which they took were reasonable under the circumstances and were, therefore, not prohibited by the Maryland Antitrust Act. They further maintain that Rouse's actions were taken independently of the other defendants for the purpose of enforcing the "use" clause in Baycraft's lease. ³ The defendants argue that, even conceding some evidence of price-fixing, such evidence was insufficient to establish a "contract, combination, or conspiracy" to fix prices.

(a)

In considering the defendants' argument that their alleged actions were "reasonable," a brief review of the applicable law is in order.

As interpreted by the Supreme Court, § 1 of the Sherman Act renders unlawful only those restraints of trade which are unreasonable. Standard Oil Co. v. United States, 221 U.S. 1, 58, 31 S.Ct. 502, 515, 55 L.Ed. 619 (1911). The Maryland Antitrust Act specifically limits its prohibition to unreasonable restraints of trade or commerce. § 11-204(a)(1). Determining whether a particular practice constitutes an unreasonable restraint of trade ordinarily requires a weighing of all "the circumstances of a case in decidingwhether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition." Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36, 49, 97 S.Ct. 2549, 2557, 53 L.Ed.2d 568 (1977). This requirement, known as the "rule of reason," was further described by the Supreme Court as follows ( Continental T.V., Inc. v. GTE Sylvania, Inc., supra, 433 U.S. at 49 n. 15, 97 S.Ct. at 2557 n. 15, quoting from Chicago Board of Trade v. United States, 246 U.S. 231, 238, 38 S.Ct. 242, 243, 62 L.Ed. 683 (1918)):

"The true test of legality is whether the restraint imposed is such as merely regulates and perhaps thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine that question the court must ordinarily consider the facts peculiar to the business to which the restraint is applied; its condition before and after the restraint was imposed; the nature of the restraint and its effect, actual or probable. The history of the restraint, the evil believed to exist, the reason for adopting the particular remedy, the purpose or end sought to be attained, are all relevant facts. This is not because a good intention will save an otherwise objectionable regulation or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences."

The rule of reason, however, is inapplicable to certain practices which are deemed to be unreasonable per se. As explained in Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958):

"However, there are certain agreements or practices which because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use. This principle of per se unreasonableness not only makes the type of restraints which are proscribed by the Sherman Act more certain to the benefit of everyone concerned, but it also avoids the necessity for an incredibly complicated and prolonged economic investigation into the entire history of the industry involved, as well as related industries, in an effort to determine at large whether a particular restraint has been unreasonable--an inquiry so often wholly fruitless when undertaken."

As indicated above, if an antitrust plaintiff can establish that a challenged practice is...