Brandywine Village Associates v. Carlino East Brandywine, L.P. et al

MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM CORRECTED Memorandum of Law

E.D. Pa.May 24, 2017

ACTIVE\49042544.v1-5/22/17 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA BRANDYWINE VILLAGE ASSOCIATES, : : Plaintiff, : Civil Action No. 16-cv-5209 v. : : CARLINO EAST BRANDYWINE, L.P., et al., : : Defendants. : MEMORANDUM OF LAW IN SUPPORT OF MOTION OF DEFENDANTS, CARLINO EAST BRANDYWINE, L.P., CHRISTINA WATTERS, KATHERINE KETTLETY, FRANK WATTERS, AND THOMAS WATTERS, TO DISMISS AMENDED COMPLAINT PURSUANT TO FEDERAL RULES OF CIVIL PROCEDURE 12(b)(6) AND 12(b)(1) Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 1 of 32 ACTIVE\49042544.v1-5/22/17 i TABLE OF CONTENTS I. INTRODUCTION .............................................................................................................. 1 II. RELEVANT FACTS AS ALLEGED IN THE FIRST AMENDED COMPLAINT ......... 1 III. PLAINTIFF FAILS TO STATE A CLAIM FOR CONSPIRACY TO RESTRAIN TRADE IN VIOLATION OF SECTION 1 OF THE SHERMAN ACT [COUNT I AGAINST ALL DEFENDANTS] ...................................................................................... 4 A. No “Hanover” Antitrust Standing and No Antitrust Injury: BVA Lacks Antitrust Standing Because (1) Neither it, nor any of the Defendants, Compete in the Relevant Market Described in the FAC; (2) Antitrust Injury is Not Alleged; and (3) the Other Standing Factors Weigh Against Standing. ................................................................................................................................. 5 1. The Standard for Antitrust Standing ........................................................... 6 2. BVA Fails to Plead that Its Own Business Injury is “Inextricably Intertwined” with Anticompetitive Harm Targeted at the Alleged Supermarket Market.................................................................................... 7 3. BVA Does Not Adequately Plead Antitrust Injury. .................................... 9 4. The Remaining “Antitrust Standing” Factors Weigh Decidedly Against BVA. ............................................................................................ 11 B. Plaintiff Pleads no Facts Demonstrating an Effect on Interstate Commerce. ....... 12 C. Plaintiff Fails To Allege That Defendants Engaged In A Contract, Combination, Or Conspiracy In Restraint Of Trade. ............................................ 13 D. Plaintiff Pleads no Agreement in Restraint of Trade Proximately Caused it Harm. .................................................................................................................... 15 E. Plaintiff Fails to Adequately Plead the Relevant Market...................................... 16 F. Carlino’s Alleged Conduct Cannot be the Basis for an Antitrust Claim. ............. 17 1. The Noerr-Pennington doctrine protects Carlino’s petitioning conduct. ..................................................................................................... 17 2. “Other” purported conduct is not alleged to be illegal or improper. ........ 19 G. The FAC is Silent Regarding the Individual Defendants. .................................... 19 IV. PLAINTIFF FAILS TO STATE A CLAIM FOR UNFAIR COMPETITION (COUNT II AGAINST ALL DEFENDANTS) ................................................................ 20 Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 2 of 32 ii ACTIVE\49042544.v1-5/22/17 V. PLAINTIFF FAILS TO STATE A CLAIM FOR ABUSE OF PROCESS (COUNT III AGAINST CARLINO ONLY) .................................................................................... 21 A. Plaintiff Fails To State A Claim Regarding The Carlino Tort Action. ................. 22 B. Plaintiff Fails To State A Claim Regarding The Condemnation Action. ............. 22 VI. PLAINTIFF FAILS TO STATE A CLAIM FOR SPECIFIC PERFORMANCE (COUNT IV AGAINST CARLINO AND INDIVIDUAL DEFENDANTS) .................. 23 VII. PLAINTIFF FAILS TO STATE A CLAIM FOR BREACH OF CONTRACT (COUNT V AGAINST THE INDIVIDUAL DEFENDANTS) ....................................... 24 VIII. CONCLUSION ................................................................................................................. 25 Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 3 of 32 iii ACTIVE\49042544.v1-5/22/17 TABLE OF AUTHORITIES Page(s) Cases Acme Markets, Inc. v. Wharton Hardware and Supply Corp., 890 F.Supp. 1230 (D. NJ 1995) ...............................................................................................15 Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 499–500 (1988)…………..18 Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519 (1983) ...................................................................................................................6 Barakat v. Delaware Cty. Mem. Hosp., 1997 WL 381607 (July 2, 1997 E.D. Pa.) ..........................................................................21, 22 Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178 (3d Cir. 1997).......................................................................................................6 Bayada Nurses, Inc. v. Comm., Dept. of Labor and Industry, 8 A.3d 866 (Pa. 2010) ..............................................................................................................19 Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) ........................................................... passim Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477 (1977) .........................................................................................................4, 9, 19 Burtch v. Milberg Factors, Inc., 662 F.3d 212 (3d. Cir. 2011)....................................................................................................13 City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 264 (3d Cir. 1998)…………………….5 Coll v. First American Title Ins. Co., 642 F.3d 876 (10th Cir. 2011) .................................................................................................14 Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365 (1991) .................................................................................................................14 CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053 (Pa. Super. 1999) .............................................................................................24 Eastern R.R. Presidents Conference v. Noerr Motor Freight, 365 U.S. 127 (1961) .................................................................................................................18 Ethypharm S.A. France v. Abbott Labs., 707 F.3d 223 (3d Cir. 2013).......................................................................................................6 Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 4 of 32 iv ACTIVE\49042544.v1-5/22/17 Fidelity Nat. Title Ins. Co. v. Vincent E. Craven, Jr., 2016 WL 215068 (Jan. 19, 2016 E.D. Pa.) ..............................................................................25 In re: Flonase Antitrust Litig., 907 F.Supp.2d 637 (E.D. Pa. 2012) ...................................................................................18, 19 Gen. Refractories Co. v. Fireman’s Fund Ins. Co., 337 F.3d 297 (3d Cir. 2003).....................................................................................................22 Giordano v. Claudio, 714 F.Supp.2d 508 (E.D. Pa. 2010) ...................................................................................20, 23 Hanover 3201 Realty, LLC v. Vill. Supermarkets, Inc., 806 F.3d 162 (3d Cir. 2015), cert. denied, 136 S. Ct. 2451 (2016) ...........................................................................7, 8 Harold Friedman, Inc. v. Thorofare Markets, Inc., 587 F.2d 127 (3d Cir. 1978).....................................................................................................12 In re Insurance Brokerage Antitrust Litigation, 618 F.3d 300 (3d Cir. 2010).....................................................................................................13 JetAway Aviation v. Bd. of Cty. Comm’rs of Cty. of Montrose, Colo., LLC, 754 F.3d 824 (10th Cir. 2014) .................................................................................................10 Jetro Cash & Carry Enterprises, Inc. v. Food Distribution Ctr., 569 F. Supp. 1404 (E.D. Pa. 1983) ..........................................................................................17 Lackner v. Glosser, 892 A.2d 21 (Pa. Super. 2006) .................................................................................................23 Langman v. Keystone Nat’l Bank & Trust Co., 672 F. Supp. 2d 691 (E.D. Pa. 2009) .................................................................................21, 22 Larry Pitt & Ass. v. Lundy Law, LLP, 2013 WL 6536739 (Dec. 13, 2013 E.D. Pa.) ...............................................................14, 20, 23 Levin v. Upper Makefield Twp., Bucks Cty., Pa., 90 Fed. App’x 653 (3d Cir. 2004).........................................................................21, 22, 23 In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144 (3d Cir. 1993)...............................................................................................6, 11 Martin B. Glasser Dodge Co. v. Chrysler Corp., 570 F.2d 71 (3d Cir. 1977).........................................................................................................4 Matthews v. Lancaster Gen. Hosp., 87 F.3d 624 (3d Cir 1996)..........................................................................................................9 Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 5 of 32 v ACTIVE\49042544.v1-5/22/17 McGee v. Feege, 535 A.2d 1020 (Pa. 1987) ........................................................................................................21 McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232, 100 S.Ct. 502 (1980) .........................................................................................12 Naythons v. Stradley, Ronon, Stevens & Young, LLP, 2008 WL 1914750 (E.D. Pa. Apr. 30, 2008) ...........................................................................22 Northeast Women’s Center, Inc. v. McMonagle, 670 F.Supp. 1300 (E.D. Pa. 1987) .............................................................................................4 Philadelphia Taxi Ass’n, Inc. v. Uber Techs., Inc., 2016 WL 6525389 (E.D. Pa. Nov. 3, 2016) (Sanchez, J.) .......................................................10 Ruth v. Crane, 392 F. Supp. 724 (E.D. Pa. 1975) ............................................................................................24 Satnam Distributors LLC v. Commonwealth-Altadis, Inc., et al., 140 F.Supp.2d 405 (E.D. Pa. 2015) ...................................................................................16, 17 Schafer v. Decision One Mortg. Corp., No. 08-5653, 2009 WL 1532048 (E.D. Pa. May 29, 2009) .......................................................3 Scocca v. Cendant Mortgage Corp., 2004 WL 2536837 (Nov. 9, 2004 E.D. Pa.) ............................................................................25 Shiner v. Moriarty, 706 A.2d 1228 (Pa. Super. 1998) .............................................................................................21 Sigmapharm, Inc. v. Mut. Pharmaceutical Co., 772 F.Supp. 2d 660 (E.D. Pa. 2011) ........................................................................................20 Tomalonis v. Levant, 2005 WL 1677555 (Pa. Super. May 10, 2005) ........................................................................23 Trustees of University of Pennsylvania v. St. Jude Children’s Research Hosp., 940 F.Supp.2d 233 (E.D. Pa. 2013) .........................................................................................17 Tunis Bros. Co. v. Ford Motor Co., 952 F.2d 715 (3d Cir. 1991).....................................................................................................17 Ware v. Rodale Press, Inc., 322 F.3d 218 (3d Cir. 2003).....................................................................................................24 Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 6 of 32 vi ACTIVE\49042544.v1-5/22/17 Statutes 42 Pa.C.S. §8351 ............................................................................................................................21 Other Authorities G. Bochetto, D. Heim, J. O’Connell & R. Tintner, Wrongful Use of Civil Proceedings and Related Torts in Pennsylvania, §2.2 (1st Ed. 2016) ....................................21 Pennsylvania Rule of Civil Procedure 2327 ..................................................................................22 Pennsylvania Rule of Professional Conduct 3.3 ..............................................................................2 Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 7 of 32 ACTIVE\49042544.v1-5/22/17 1 I. INTRODUCTION Defendants Carlino East Brandywine, LP (“Carlino”) and the Individual Defendants (collectively “Defendants”) move to dismiss all claims alleged against them by Plaintiff Brandywine Village Associates (“BVA”) in the First Amended Complaint (“FAC”). Defendants assume the Court’s familiarity with BVA’s claims. BVA brings long-running state court land use disputes – which BVA continues to lose miserably – to federal court repackaged as an antitrust claim in the local “Supermarket Market.” The claim has numerous, fatal pleading defects. BVA lacks antitrust standing, and no antitrust injury is alleged. BVA pleads the wrong relevant market. BVA fails to plead a conspiracy or contract to restrain trade, as opposed to mere collaboration among parties attempting to build a shopping center and supermarket. BVA fails to plead proximate cause, and alleges misconduct in the form of petitioning governmental authorities that is immune under Noerr-Pennington. The Individual Defendants are not accused of any anticompetitive conduct at all. BVA has had the opportunity to conduct discovery and amend. The antitrust claim should now be dismissed with prejudice, and the remaining state law claims either dismissed with prejudice for the reasons below, or dismissed upon the Court’s declination to exercise supplemental jurisdiction over them. II. RELEVANT FACTS AS ALLEGED IN THE FIRST AMENDED COMPLAINT1 BVA is the owner of a shopping center in East Brandywine Township, Pennsylvania, called Brandywine Village Shopping Center (the “BVA Center”). See FAC, ¶ 18. Carlino is a real estate developer who is developing property (defined in the FAC as the “Watters Property”) to include a Giant supermarket that will neighbor the BVA Center. See id., ¶ 5. Each of the Individual Defendants has a fee ownership interest in the Watters Property. See id., ¶ 31. 1 Carlino and the Individual Defendants do not admit the truth of any factual allegations in the FAC, but recite them generally herein solely for purposes of their Motion to Dismiss. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 8 of 32 2 ACTIVE\49042544.v1-5/22/17 BVA completed construction of the BVA Center in 1995, and alleges that it had a supermarket “anchor tenant” called “Cropper’s Market,” and subsequently, “Stauffer’s Market.” See id., ¶¶ 82, 105-08. In 2002, Associated Wholesales, Inc. (“AWI”) purchased Cropper’s Market and assumed Cropper’s lease with BVA. AWI went bankrupt in 2014, and 1257 Horseshoe Pike Downingtown LLC, owned by C&S Wholesale Grocers (“C&S”), acquired the lease with BVA. See id., ¶ 112. C&S subleased to Stauffer’s which operated a market there for few months, and then C&S terminated its lease with Plaintiff by electing not to renew it in the summer of 2015. See id., ¶¶ 121, 123. Plaintiff alleges that C&S is a major wholesale supplier of Giant. See id., ¶ 113. Plaintiff speculates that Giant was able to ensure that BVA’s supermarket tenant who would compete with Giant in the future went dark before Giant opened. See id., ¶ 7. Plaintiff alleges that, since losing its supermarket tenant in September 2015, it has made unspecified “diligent efforts” to market its supermarket space. Id., ¶ 125. Plaintiff alleges it has been unable to obtain a new “supermarket tenant at a reasonable long-term rental rate and on reasonable terms.” See id., ¶¶ 125-26.2 The remainder of the FAC alleges certain purportedly improper conduct by Defendants, none of which is actionable under the Sherman Act or otherwise: • Carlino opposed BVA’s plan before the Township Planning Commission to expand the size of BVA’s anchor space, and the Commission has not acted on BVA’s plan to date (see id., ¶¶ 128-30); • Carlino’s representatives made statements regarding Carlino’s intention to develop and open the Giant supermarket (see id., ¶¶ 94-97); 2 Notwithstanding the requirement to accept this fact as true for the purposes of a 12(b)(6) motion, it is demonstrably false based on facts in the Court record. Even before BVA filed its motion for leave to amend with the proposed FAC, Len Blair, of BVA, admitted John Cropper, another BVA partner, intends to reopen Cropper’s Market in the BVA anchor space. See ECF No. 89, at 3 and Eidel Decl., ¶ 3, Exh. “B”. BVA has not disavowed this admission despite ample opportunity to do so to date. Thus, it appears the factual allegation in paragraph 126 of the FAC requires correction in accordance with Pennsylvania Rule of Professional Conduct 3.3. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 9 of 32 3 ACTIVE\49042544.v1-5/22/17 • Carlino filed development plans for the Watters Property, which Plaintiff itself opposed through use of the legal process (see id., ¶¶ 131-50)3; • Carlino held meetings – alleged to have been “secret,” but which were obviously known to Plaintiff – with the Township, where Carlino purportedly expressed the need for a new road to provide a point of access (i.e. connector road) from U.S. Route 322 to another road, which Plaintiff alleges led to the condemnation of cross easements previously granted to Plaintiff (see id., ¶¶ 154-66 and 175-83); • Carlino and Giant entered a lease for Giant to lease the developed Watters Property and Giant agreed to contribute to the cost of the Connector Road (see id., ¶¶ 8(b) and 169); • In August 2015, Carlino placed a “Giant Coming Soon” sign along the Watters Property (see id., ¶ 122); • In 2016, Carlino and Giant analyzed the cash flow that BVA generates from the BVA Center (see id., ¶ 103); • Carlino filed a pending state court lawsuit against Plaintiff (and others) for tortious interference with business relations and other causes of action, as to which Plaintiff’s preliminary objections have been rejected so the case has proceeded (see id., ¶¶ 188-93);4 • Carlino’s commercial real estate broker created an advertisement for its proposed shopping center, called the “East Brandywine Shopping Center” (see id., ¶¶ 196-200, Exh. C);5 • The Agreement of Sale between Carlino and the Individual Defendants requires the Individual Defendants to cooperate with Carlino’s land development efforts regarding the Watters Property and the Individual Defendants have cooperated (see id., ¶¶ 12-13); and • The Agreement of Sale requires Carlino to keep the Individual Defendants informed about communications between Carlino and the Township (or other municipal entities) regarding Carlino’s land development efforts (see id., ¶ 14). 3 Thus, according to Plaintiff, it should feel free to oppose Carlino’s development plans on any basis Plaintiff wishes, but any objection by Carlino to Plaintiff’s expansion plans is somehow automatically “improper.” See id., ¶¶ 128-29. 4 The Court may take judicial notice of the state court docket and order showing that the court rejected BVA’s preliminary objections attacking Carlino’s complaint. See Chester County Court of Common Pleas No. 2015-02938 (the “Carlino Tort Action”); Schafer v. Decision One Mortg. Corp., No. 08-5653, 2009 WL 1532048, at *3 (E.D. Pa. May 29, 2009) (“[A] court may take judicial notice of the record from a state court proceeding and consider it on a motion to dismiss.”). 5 The FAC abandons BVA’s frivolous Lanham Act and common law commercial disparagement claims, but now claims that the broker’s listing – that obviously contains a typographical error – is part of some “predatory scheme.” See id., ¶¶196-97. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 10 of 32 4 ACTIVE\49042544.v1-5/22/17 III. PLAINTIFF FAILS TO STATE A CLAIM FOR CONSPIRACY TO RESTRAIN TRADE IN VIOLATION OF SECTION 1 OF THE SHERMAN ACT [COUNT I AGAINST ALL DEFENDANTS] The Court should dismiss Count I with prejudice for failure to state a claim for restraint of trade under Section 1 of the Sherman Act. Section 1 of the Sherman Act requires a plaintiff to plead and prove that: (1) “the defendants conspired among each other”; (2) “the conspiracy produced adverse anticompetitive effects within the relevant product and geographic market”; (3) “the object and conduct pursuant to the conspiracy were illegal”; and (4) “plaintiff was injured as a proximate result.” Northeast Women’s Center, Inc. v. McMonagle, 670 F.Supp. 1300, 1304 (E.D. Pa. 1987) (citing Martin B. Glasser Dodge Co. v. Chrysler Corp., 570 F.2d 71, 81 (3d Cir. 1977)) (finding no adverse impact where plaintiff failed to characterize or quantify the alleged anti- competitive damage). “Adverse impact is not simply shown by a loss of profits, or even by the total elimination of one competitor.” Id. at 1305 (internal citation omitted) (emphasis added). “[T]he antitrust laws were not enacted simply to protect such discreet, individual business interests.” Northeast Women’s Center, Inc., 670 F.Supp. at 1304. “The antitrust laws were enacted for the protection of competition, not competitors.” Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 488 (1977). Thus, a plaintiff does not plead a Section 1 claim merely by alleging its own business injury, which is precisely what BVA has attempted to allege here. Id. With the foregoing principles in mind, there are seven (7) separate and independent reasons why Count I fails to state a claim: 1. No Antitrust Standing, Including No Antitrust Injury: BVA lacks antitrust standing because neither it, nor any of the Defendants, competes in the alleged relevant market. BVA inadequately pleads “Hanover standing” because its alleged business injury is not “inextricably intertwined” with injury to a supermarket competitor who was or is being targeted by any of the non-supermarket Defendants. Even if the parties were aligned sufficiently to bring the case within Hanover – which they are not – the FAC fails to allege injury to competition in the Supermarket Market, a necessary element of antitrust standing. All of the other antitrust standing factors weigh completely against BVA. See Sections III.A.1 - A.4, infra. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 11 of 32 5 ACTIVE\49042544.v1-5/22/17 2. No Effect on Interstate Commerce: BVA pleads no facts whatsoever to support the contention that defendants’ actions produced an effect on interstate commerce. See Section III.B, infra. 3. No Conspiracy in Restraint of Trade: BVA fails to adequately allege that Defendants engaged in a contract, combination or conspiracy in restraint of trade. See Section III.C, infra. 4. No Proximate Cause: BVA fails to plead that any purported agreement in restraint of trade proximately caused harm to Plaintiff. See Section III.D, infra. 5. No Relevant Market: BVA fails to adequately plead the relevant market. See Section III.E, infra. 6. Noerr-Pennington Immunity: Carlino’s alleged conduct in petitioning governmental authorities is absolutely immune and cannot be the basis for an antitrust claim. See Section III.F, infra. 7. No Conduct by the Individual Defendants: The FAC is silent regarding any conduct by the Individual Defendants besides agreeing to sell their vacant property to Carlino. See Section III.G, infra. A. No “Hanover” Antitrust Standing and No Antitrust Injury: BVA Lacks Antitrust Standing Because (1) Neither it, nor any of the Defendants, Compete in the Relevant Market Described in the FAC; (2) Antitrust Injury is Not Alleged; and (3) the Other Standing Factors Weigh Against Standing. As a threshold requirement to maintain a Section 1 Sherman Act claim, a plaintiff must establish “antitrust standing.” City of Pittsburgh v. W. Penn Power Co., 147 F.3d 256, 264 (3d Cir. 1998). Whether antitrust standing exists depends on a number of factors, but an essential factor is that the plaintiff suffered “antitrust injury,” i.e., injury to competition of the type the antitrust laws were designed to address. Id. The FAC alleges the relevant market is the “Supermarket Market” in, essentially, East Brandywine Township. BVA admittedly is not, however, a supermarket, but rather a commercial landowner. FAC, ¶22. BVA thus indisputably lacks standing as a competitor or consumer in the alleged relevant market. The question thus presented to the Court is whether the FAC adequately alleges a “Hanover exception” to the rule that only competitors or consumers have antitrust standing. See Hanover 3201 Realty, LLC v. Vill. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 12 of 32 6 ACTIVE\49042544.v1-5/22/17 Supermarkets, Inc., 806 F.3d 162 (3d Cir. 2015), cert. denied, 136 S. Ct. 2451 (2016). BVA attempts to come within this exception by alleging its purported business injury is “inextricably intertwined” with antitrust injury targeted against a Supermarket Market participant by another Supermarket Market participant. The FAC’s “Hanover exception” allegations are clearly deficient because they allege that BVA has no supermarket tenant at which anticompetitive conduct could have been targeted, and none of Defendants is a supermarket that could have targeted any such conduct. Moreover, even if BVA had adequately pleaded Hanover standing under an inextricably intertwined theory, the FAC is devoid of any facts that would establish injury to competition in the alleged Supermarket Market. 1. The Standard for Antitrust Standing To establish an actionable antitrust claim, a plaintiff must satisfy antitrust standing. The Third Circuit has articulated several factors that courts should consider to determine standing: (1) the causal connection between the antitrust violation and the harm to the plaintiff and the intent by the defendant to cause that harm, with neither factor alone conferring standing; (2) whether the plaintiff’s alleged injury is of the type for which the antitrust laws were intended to provide redress; (3) the directness of the injury, which addresses the concerns that liberal application of standing principles might produce speculative claims; (4) the existence of more direct victims of the alleged antitrust violations; and (5) the potential for duplicative recovery or complex apportionment of damages. In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d 1144, 1165 (3d Cir. 1993) (citing Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 545 (1983)). The factors suggest a balancing test for antitrust standing but, the second factor, antitrust injury, is “a necessary but insufficient condition of antitrust standing.” Barton & Pittinos, Inc. v. SmithKline Beecham Corp., 118 F.3d 178, 182 (3d Cir. 1997); see also Ethypharm S.A. France v. Abbott Labs., 707 F.3d 223, 233 (3d Cir. 2013) (“If [antitrust injury] is lacking, we need not Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 13 of 32 7 ACTIVE\49042544.v1-5/22/17 address the remaining [antitrust standing] factors.”). While all of the factors weigh against antitrust standing for BVA, and the second prerequisite factor, antitrust injury, is missing entirely. 2. BVA Fails to Plead that Its Own Business Injury is “Inextricably Intertwined” with Anticompetitive Harm Targeted at the Alleged Supermarket Market. Addressing the third factor – directness of injury – first, the FAC indisputably fails to allege any direct antitrust injury to BVA because BVA is not in the alleged relevant market at all. BVA instead attempts to allege “indirect injury” and thus bring itself within an exception to the direct injury requirement for standing. BVA cites the Hanover case as its hook. FAC, ¶ 66. BVA’s attempt fails. The Hanover plaintiff was a shopping center owner who claimed that the supermarket defendant (Shop-Rite) acted in violation of the antitrust laws to prevent a competing supermarket (Wegmans) from renting space from Hanover in the geographic market. Hanover, 806 F.3d at 167-70. Hanover – like BVA here - admitted that it was not a competitor in the relevant market (“full service supermarkets”), but instead claimed that it was “inextricably intertwined” with that market for purposes of antitrust standing. Such standing existed, Hanover alleged, because Shop- Rite’s actions were aimed at preventing its putative tenant Wegmans from renting from Hanover, and this caused Hanover harm that was “the essential component of Defendants’ anticompetitive scheme . . . .” Id. at 174. The court agreed, finding that Hanover was the “immediate target and bore the costs of the Defendants’ scheme.” Id. at 176. Based on this indirect injury, Hanover was permitted to pursue its Section II attempted monopolization claim, a claim that BVA does not allege in this case. The parties here, in any event, are differently aligned than they were in Hanover. BVA admits that Carlino is a “property developer,” not a supermarket competitor in the Supermarket Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 14 of 32 8 ACTIVE\49042544.v1-5/22/17 Market. FAC, ¶ 5. Similarly, the Township is not a supermarket either,6 meaning neither of these alleged “co-conspirators” could even seek to monopolize the Supermarket Market. This different alignment demonstrates that the non-supermarket Defendants here could not have any “anticompetitive scheme” in the alleged relevant market – the “Supermarket Market” – that they might have accomplished by “targeting” non-supermarket Plaintiff BVA. No case has extended Hanover to permit an indirect participant like BVA to assert antitrust injury against indirect participant defendants. The FAC’s addition of Giant as defendant does not cure BVA’s lack of standing as to Defendants because, as discussed below, BVA is not an “indirect participant” in the Supermarket Market. The FAC alleges it does not have an existing or prospective supermarket tenant. Moreover, BVA does not allege Defendants entered into any contract or conspiracy to target Stauffer’s or to prevent BVA from obtaining a replacement supermarket. BVA itself is not an “indirect participant” in the East Brandywine Supermarket Market because the FAC explicitly alleges BVA does not have a supermarket tenant who could possibly be the “target” of anticompetitive conduct in that market. See Hanover, 806 F.3d at 167-70 (“The end goal of Defendants’ alleged anticompetitive conduct was to injure Wegmans, a prospective competitor.”); FAC, ¶ 211 (BVA “has been unable to obtain a replacement supermarket tenant”). Instead, BVA has empty, leasable space that a potential tenant -- perhaps a supermarket -- may lease in the future.7 As such, Giant’s inclusion as a defendant does nothing to establish Hanover standing because BVA has no actual or prospective supermarket tenant against whom defendants could have targeted anticompetitive conduct, and with whom BVA could be considered “inextricably intertwined.” BVA also fails to allege that the former “family supermarket” tenant 6 The Individual Defendants also are not alleged to be a “supermarket,” but rather are landowners. FAC, ¶ 16. 7 The FAC nowhere pleads that BVA’s available anchor space could only be used for a supermarket. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 15 of 32 9 ACTIVE\49042544.v1-5/22/17 (Stauffer’s) was lost because of anything that any defendant did. Instead, BVA explicitly alleges that the former tenant (“AWI”) went bankrupt, and the entity that acquired the lease in bankruptcy proceedings elected not to renew the lease. FAC, ¶¶ 110, 121, 123. Although the FAC includes a melodramatic heading about Giant’s purported “engineered closure” of Stauffer’s, the allegations under this heading, read carefully, do not actually allege the Giant did anything to cause Stauffer’s to close. See FAC, ¶¶ 104-124.8 Significantly, nothing in these allegations, or any others, pleads that Carlino or the Individual Defendants had anything to do with the closure of Stauffer’s. Thus, BVA has not adequately plead that any act by any defendant “targeted” another supermarket entity to satisfy Hanover’s “inextricably intertwined” exception to the direct antitrust standing requirement. 3. BVA Does Not Adequately Plead Antitrust Injury. To properly plead antitrust injury, a plaintiff must plead “more than injury causally linked to an illegal presence in the market”; instead, a plaintiff must plead “injury of the type the antitrust laws were intended to prevent and that flows from that which makes defendant[’s] acts unlawful.” Brunswick, 429 U.S. at 489. In other words, “antitrust plaintiff[s] must prove that the challenged conduct affected the prices, quantity or quality of goods and services, not just [the plaintiffs’] welfare.” Matthews v. Lancaster Gen. Hosp., 87 F.3d 624, 641 (3d Cir 1996). BVA’s sole antitrust injury allegation is that the alleged geographic market does not have a supermarket conveniently nearby. FAC, ¶ 210. BVA alleges that the anti-competitiveness of the various defendants’ conduct is “demonstrated” by the absence of such a supermarket, although BVA never goes so far as to 8 The FAC nowhere pleads that C&S’s election not to renew its lease with BVA was wrongful, or that Giant’s decision not take over the lease and open a store on BVA’s premises was wrongful. See FAC, ¶¶ 119-121. To the exent BVA wishes to speculate that C&S had an economic interest to favor Giant, or that Stauffer wished to close because he feared forthcoming competition from Giant, those are effects of competition, not anti-competition. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 16 of 32 10 ACTIVE\49042544.v1-5/22/17 allege that the defendants’ conduct caused the absence of such a supermarket. Id. BVA’s bare allegation of antitrust injury is insufficient as a matter of law. First, BVA only alleges injuries to itself by a potentially competing shopping center developer (Carlino). FAC, ¶¶ 211-212 (alleging BVA lost goodwill, reputation, the ability to attract tenants, and lost rent). Such alleged damage is not “damage to competition” even if BVA had alleged the relevant market was the market for commercial shopping center space, where BVA and Carlino do potentially compete. See, e.g., Philadelphia Taxi Ass’n, Inc. v. Uber Techs., Inc., 2016 WL 6525389, *3 (E.D. Pa. Nov. 3, 2016) (Sanchez, J.) (granting motion to dismiss antitrust claim because “Plaintiffs have failed to establish antitrust injury because they do not allege any injury to competition. Instead, their Amended Complaint is limited to injuries Plaintiffs have suffered as competitors with [Defendant].”) Second, if BVA is correctly identifying a relevant market, then BVA is nothing more than a monopolist in that market who seeks to prevent another alleged monopolist from replacing it (or competing with it). The Sherman Act does not protect monopolists like BVA. See, e.g. JetAway Aviation v. Bd. of Cty. Comm'rs of Cty. of Montrose, Colo., LLC, 754 F.3d 824, 830 (10th Cir. 2014) (opinion concurring in per curium affirmance) (“The district court thus ultimately determined that, because ordinarily the Sherman Act does not protect one monopolist from the efforts of another aspiring monopolist to replace it, [plaintiff] could not establish that Defendants caused an antitrust injury. Consequently, [plaintiff] could not establish antitrust standing.” (emphasis added)).9 BVA’s injury to its own monopolistic interests does not suffice as antitrust injury for a Section 1 claim. 9 The irony of BVA’s antitrust accusations is, of course, that if BVA’s standing, relevant market, sham litigation, and antitrust injury theories were accurate, BVA is the antitrust violator. Carlino is a shopping center developer with a prospective supermarket tenant, just like the plaintiff in Hanover. BVA is an obstreperous shopping center owner with anchor space suitable for a supermarket, and with a partner (Cropper) in the supermarket business, similar to the Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 17 of 32 11 ACTIVE\49042544.v1-5/22/17 4. The Remaining “Antitrust Standing” Factors Weigh Decidedly Against BVA. The absence of antitrust injury – the “second factor” in the standing analysis – precludes a finding of standing. However, even if some remote flicker of antitrust injury were plead, all of the other factors weigh against a finding of standing. As to the first factor, there is no causal connection between the alleged antitrust violation and the purported harm to BVA, and the intent by any defendant to cause that harm. BVA fails to allege that any defendant engaged in monopolistic behavior in the Supermarket Market or that any defendant intended to cause harm to BVA as a landlord. The third factor, the directness of the injury, is absent as discussed above, because BVA lacks indirect “inextricably intertwined” standing under Hanover. In addition, however, BVA fails to allege that the purported “increased” costs imposed by any defendants somehow caused BVA’s purported inability to locate a supermarket tenant – or any type of tenant – for its anchor space. This factor weighs heavily against BVA to avoid producing “speculative claims.” See In re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d at 1165. The fourth factor, the existence of more direct victims of the alleged antitrust violations, also weighs against standing for BVA. Consumers in the relevant market, and potential tenants for BVA’s anchor space constitute more direct victims than is BVA. The fifth factor, the potential for duplicative recovery or complex apportionment of damages, also weighs heavily against antitrust standing because BVA claims damages on behalf of both its non-existent anchor tenant and “residents of East Brandywine Township.” FAC, ¶¶ 210–11.10 BVA has failed to plead that it has antitrust supermarket defendant (Shoprite) in Hanover. And, similar to the defendant in Hanover, BVA has indisputably engaged in uniformly unsuccessful, sham litigation and land use challenges to attempt to prevent competition in the alleged relevant market. In short, if BVA’s theories had any credence, BVA should immediately confess judgment to a Section 2 attempted monopolization claim. 10 BVA alleges other damages that are speculative as a matter of law because they consist of (a) the “expense and burden” of a condemnation proceeding which is alleged to be a “sham” but has not even been decided yet; and (b) the Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 18 of 32 12 ACTIVE\49042544.v1-5/22/17 standing under the “inextricably intertwined” exception under Hanover or otherwise, and thus BVA’s antitrust claim should be dismissed. B. Plaintiff Pleads no Facts Demonstrating an Effect on Interstate Commerce. A Sherman Act claim requires that anticompetitive conduct “be shown ‘as a matter of practical economics' to have a not insubstantial effect on the interstate commerce involved.” McLain v. Real Estate Bd. of New Orleans, Inc., 444 U.S. 232, 246, 100 S.Ct. 502, 511 (1980). Harold Friedman, Inc. v. Thorofare Markets, Inc., 587 F.2d 127, 132 (3d Cir. 1978). The entirety of the FAC’s interstate commerce allegations consist of a simple, conclusory sentence: “The supermarket business is substantial and affects interstate commerce.” FAC, ¶ 38.11 This is, of course, insufficient pleading under Twombly. Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). The FAC alleges that the relevant market is East Brandywine Township and a very limited surrounded area. FAC, ¶ 51. The FAC further alleges that the only supermarket customers affected are residents in this geographic area. FAC, ¶ 52. The FAC does not allege that a substantial number of residents from other states crossed into Pennsylvania to shop at the supermarkets previously occupying BVA’s anchor space. The FAC does not allege that defendants’ alleged conduct has prevented BVA from doing business in other states. The FAC does not allege an effect on the number of supermarkets in other states, or an effect on the price, quality, or quantity of supermarket goods in other states. No facts are pleaded which would establish that defendants’ activities have had a “not insubstantial effect” on interstate commerce. Count I should be dismissed on this separate and independent ground alone. loss of rent from not signing up an “anchor tenant” (which might or might not be a supermarket) without any allegation that the inability to lease space to an “anchor tenant” was caused by anything any defendant did. FAC, ¶¶ 210–11. 11 The interstate commerce requirement of the Sherman Act may be satisfied by demonstrating that defendant’s activities either are in interstate commerce or affect interstate commerce. McLain, 444 U.S. at 242. BVA does not plead that any defendant’s activities “are in interstate commerce,” but instead relies on the latter theory that defendants’ activities “affect interstate commerce.” FAC, ¶ 38. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 19 of 32 13 ACTIVE\49042544.v1-5/22/17 C. Plaintiff Fails To Allege That Defendants Engaged In A Contract, Combination, Or Conspiracy In Restraint Of Trade. “To prevail on a [S]ection 1 claim, a plaintiff must establish the existence of an agreement” to restrain trade. Burtch v. Milberg Factors, Inc., 662 F.3d 212, 221 (2011) (no Section 1 claim without agreement to restrain trade). BVA must plead concerted action, unity of purpose, or a common design and understanding. Id. Although Plaintiff makes sweeping allegations of Carlino’s conspiracy to restrain trade, it fails to plead an actual “contract” between Carlino, the Township, the Individual Defendants and/or Giant to restrain trade. See FAC, ¶¶ 1, 2, 5, 15, 94- 103, 155-177, 206-215. The FAC does not even allege the Individual Defendants’ participated in any agreement in restraint of trade, other than merely entering into a real estate agreement of sale and the speculative contention that one or more of the Individual Defendants has animus toward Plaintiff is “likely driven by competitive concerns.” See FAC, ¶¶ 16-17. Similarly, the only “agreement” between Carlino and Giant is a commercial lease that contains standard conditions including a financial contribution by Giant for the Connector Road. Id., ¶¶8(b) and 169-70. Naked claims regarding the terms of the agreement of sale -- providing for cooperation with Carlino’s land development efforts and for Carlino to keep the Individual Defendants informed -- (FAC, ¶¶12-15), personal animus (FAC, ¶ 17) of one of the Individual Defendants, and the terms of a standard commercial lease between Giant and Carlino are the type of speculative allegations that are routinely rejected.12 See Fowler, 578 F.3d at 210 (conclusory, bare boned allegations 12 The FAC argues, instead of pleading actual facts, that the Individual Defendants were “far more than unwilling conspirators here.” FAC, ¶153. By so arguing, however, BVA admits it has no direct or circumstantial evidence of a conspiratorial agreement involving the Individual Defendants. Mere “cooperation” with Carlino in its development of its shopping center (FAC, ¶ 12) is precisely the type of “parallel behavior” that is insufficient to establish a Section 1 conspiracy. See In re Insurance Brokerage Antitrust Litigation, 618 F.3d 300, 322 (3d Cir. 2010) (“We think Twombly aligns the pleading standard with the summary judgment standard in at least one important way: Plaintiffs relying on circumstantial evidence of an agreement must make a showing at both stages (with well-pled allegations and evidence of record, respectively) of ‘something more than merely parallel behavior,’ something ‘plausibly suggest[ive of] (not merely consistent with) agreement” and “allegations of conspiracy are deficient if there are ‘obvious alternative explanation[s]’ for the facts alleged. (citing Twombly, 550 U.S. at 554).”) The obvious alternative explanation for Defendants’ behavior is that the Individual Defendants are merely trying to sell land from their parents’ Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 20 of 32 14 ACTIVE\49042544.v1-5/22/17 insufficient); Twombly, 550 U.S. at 556-557 (“an allegation of parallel conduct and a bare assertion of conspiracy” are “naked assertion[s]”). If standard commercial transaction documents serve as the singular basis for antitrust liability, then no one could ever sell their land, develop the acquired land, and/or lease that land for a business. Plaintiff’s allegations regarding secret meetings between Carlino and Township officials also do not establish any unity of purpose or a common design to restrain trade in the Supermarket Market. See Larry Pitt & Ass. v. Lundy Law, LLP, 2013 WL 6536739, *5 (Dec. 13, 2013 E.D. Pa.) (without allegations of acts with “unity of purpose” to “engage in unlawful” anticompetitive behavior, Section 1 claim dismissed); Twombly, 550 U.S. at 557 (“[A] conclusory allegation of agreement at some undefined point does not supply facts adequate to show illegality.”).13 Most notably, the FAC fails to allege: • Any agreement in restraint of trade regarding C&S’s termination of the lease as Plaintiff’s supermarket tenant; • Any agreement in restraint of trade regarding Carlino opposing Plaintiff’s plan before the Township Planning Commission; • Any agreement in restraint of trade regarding Carlino’s own development plans; • Any agreement in restraint of trade regarding Carlino’s lawsuit against Plaintiff; and • Any agreement in restraint of trade regarding Carlino’s purportedly inaccurate advertisement. estate to a shopping center developer. The FAC does not detail – nor could it – how the Individual Defendants engaged in any purported conspiracy to restrain the Supermarket Market. The cases BVA cites in the FAC (¶ 153) are inapposite in as much as they involve coercion and acquiescence in the conspiracy perpetrated by the competitor to the plaintiff. No such facts are plead in the FAC. 13 Moreover, even if there were “secret” meetings at which Carlino discussed the shopping center development with a Township official, such activities would still come within Noerr-Pennington immunity. Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 383 (1991) (political decisions of governmental officials are immune even when those decisions have been infected by “selfishly motivated agreement with private interests.”); Coll v. First American Title Ins. Co., 642 F.3d 876 (10th Cir. 2011) (court holds that even bribery of public officials to induce decision making with anticompetitive effect does not create an exception to Noerr-Pennington immunity). Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 21 of 32 15 ACTIVE\49042544.v1-5/22/17 The only agreement BVA pleads is between Carlino and the Township regarding the Connector Road (see FAC at Exhibit B), which is being addressed in the pending state condemnation proceeding.14 This “agreement” speaks for itself. Nothing about it has anything to do with or evidences any intent to perform conduct in violation of the antitrust laws, either in the Supermarket Market or otherwise. The agreement has nothing to do with BVA’s feigned inability to locate a supermarket tenant. Thus, BVA fails to plead the existence of any agreement in restraint of trade, and there is no causal connection between the Connector Road condemnation agreement and alleged harm to BVA. D. Plaintiff Pleads no Agreement in Restraint of Trade Proximately Caused it Harm. BVA also fails to allege proximate cause because it has not plead that any anticompetitive agreement caused its inability to obtain a tenant or the loss of Stauffer’s as a supermarket subtenant. The FAC is silent as to how or why BVA has been unable to obtain a tenant because of any act or omission of Defendants, and despite the fact that BVA’s anchor space was adequate for prior supermarket tenants for nearly 20 years and is once again adequate for one of those prior supermarket tenants who is also a co-owner of BVA (i.e., Cropper). The FAC simply does not allege that any antitrust activity by any defendant caused any actual prospective tenant not to rent from BVA. Likewise, the FAC does not allege that Giant caused Stauffer’s to close, and certainly does not allege that Defendants had any agreement with Giant to cause Stauffer’s to close. See Acme Markets, Inc. v. Wharton Hardware and Supply Corp., 890 F.Supp. 1230, 1237 (D. NJ 1995) (proximate cause of defendant’s alleged harm was the vacancy created by its former tenant and not the complained of conduct). The FAC fails to plead facts that plausibly establish causation. 14 The state condemnation proceedings concluded on May 16. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 22 of 32 16 ACTIVE\49042544.v1-5/22/17 E. Plaintiff Fails to Adequately Plead the Relevant Market. BVA alleges that “[t]he relevant market for purposes of the antitrust claims in this action is the supermarket market in an irregularly shaped area that is centered on East Brandywine Township (the “Supermarket Market”).” See FAC, ¶ 37. This does not support a Section 1 claim because: (1) it pleads the wrong product market; and (2) it pleads no plausible economic market. The “Supermarket Market” is the market for stores who sell products typically found in supermarkets. Id., ¶¶ 39-40, and 43. The FAC does not allege that BVA, Carlino, or the Individual Defendants participate in the defined relevant market. BVA’s actual claim is that Carlino interfered with the supermarket buildings market in East Brandywine Township because both it and Carlino are in the commercial real estate market there. Id., ¶ 1 (BVA alleges defendants made an effort to destroy the BVA Center to suppress competition for Carlino’s planned shopping center). This is fundamentally different from the relevant market BVA newly alleges, and, on that basis, is defective such that dismissal is warranted. See Satnam Distributors LLC v. Commonwealth-Altadis, Inc., et al., 140 F.Supp.2d 405, 418 (E.D. Pa. 2015). BVA simply alleges the wrong product market.15 BVA also fails to plead a market that makes plausible economic sense. Satnam Distributors LLC, 140 F.Supp.2d at 418 (“[W]here a plaintiff attempts to allege a product market ‘that makes no economic sense under any set of facts,’ courts will dismiss Sherman Act claims even at early stages.”). To avoid dismissal, BVA is required “to define its proposed relevant market with reference to the rule of reasonable interchangeability and cross-elasticity of demand, or alleges a proposed relevant market that clearly does not encompass all interchangeable 15 Verification that BVA alleges the wrong market is demonstrated by the fact that, if Cropper’s were operating in BVA’s anchor space (as BVA has admitted it will be), it could have no complaint that its prospective competitor Giant was engaged in anticompetitve, as opposed to procompetitive, conduct. If a supermarket tenant in BVA’s anchor space could not claim that Giant was acting anticompetitively, then BVA certainly cannot do so either. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 23 of 32 17 ACTIVE\49042544.v1-5/22/17 substitute products. Id. at 418-19.16 BVA alleges that its the relevant economic market is defined by the fact that a monopolistic supermarket might be able to charge a higher price, without losing customers to nearby supermarkets. FAC, ¶ 55. This allegation fails because a Section I claim requires demonstrating that the alleged conspiracy has already produced adverse anticompetitive effects within the relevant market that are not outweighed by procompetitive effects. See, e.g. Jetro Cash & Carry Enterprises, Inc. v. Food Distribution Ctr., 569 F. Supp. 1404, 1415 (E.D. Pa. 1983) (for Section 1 claim, court is required to determine whether the contract or conspiracy “has ‘produced adverse anti-competitive effects within the relevant product and geographic markets. [citation omitted]”). BVA cannot plead adverse anti-competitive effects because no supermarket is open in its anchor space, and the Giant supermarket is not even built yet. BVA’s “relevant market” allegation is based on pure speculation and, as such, dismissal of Count I is warranted.17 F. Carlino’s Alleged Conduct Cannot be the Basis for an Antitrust Claim. 1. The Noerr-Pennington doctrine protects Carlino’s petitioning conduct. The Noerr-Pennington doctrine protects parties who petition the government for redress from claims arising in response to that petitioning. See Trustees of University of Pennsylvania v. St. Jude Children’s Research Hosp., 940 F.Supp.2d 233, 239 (E.D. Pa. 2013) (noting Noerr- Pennington immunity arose in antitrust context). To pierce Noerr-Pennington immunity, a party must demonstrate that the petitioning party engaged in “sham” petitioning to interfere directly with 16 Interchangeability of use “means that one product is ‘roughly equivalent’ to another product for its intended use, and assessment of interchangeability involves an examination of prices, use and quality of the goods.” Id. at 418 (citations omitted). Cross-elasticity of demand “requires an analysis of whether ‘the rise in the price of a good within the relevant product market would tend to create a greater demand for other like goods in that market.’” Id. (quoting Tunis Bros. Co. v. Ford Motor Co., 952 F.2d 715, 722 (3d Cir. 1991)). 17 The FAC also pleads that defendants’ conduct has raised “rivals’ costs.” FAC, ¶ 208. BVA does not say who is the “rival” to which this allegation refers. If the “rival” is a hypothetical supermarket in BVA’s anchor space, no facts are alleged to meet the Twombly standard; the claim is purely speculative. If the “rival” is BVA, then its own increased costs are not antitrust injury, and it would demonstrate further that BVA alleges the wrong product market. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 24 of 32 18 ACTIVE\49042544.v1-5/22/17 business relationships of a competitor. See Eastern R.R. Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 144 (1961). The conduct Plaintiff complains about is protected by this doctrine. No liability can be imposed on Carlino for: (a) opposing Plaintiff’s plan before the Township Planning Commission to expand the size of its supermarket space, (b) filing development plans for its own property, (c) petitioning the Township for a connector road, or (d) pursuing tort-related litigation against BVA. The Noerr-Pennington doctrine protects this conduct. Indeed, as to Carlino’s petitioning activity seeking executive or legislative action, the “sham exception” that may apply to judicial proceedings does not apply. Rather, the immunity is absolute. See Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S. 492, 499–500 (1988). BVA fails to plead that any petitioning conduct falls under the “sham” exception to the doctrine. Indeed, the status of the state court litigation, as explicitly plead, precludes a finding of sham litigation. BVA alleges that its three appeals to the Chester County Court of Common Pleas of the Township’s approval of the Carlino development plans remain pending, one of which BVA already lost and appealed to the Commonwealth Court.18 See FAC, ¶¶ 139-40, 146-49. In other words, BVA admits it repeatedly lost at the plan approval level and in the Chester County Court of Common Pleas, and cannot allege that it “won” any of them. The Carlino state tort action against BVA is also being actively litigated, and BVA is nowhere near “winning” that action given that its preliminary objections to Carlino’s complaint were rejected. Id. ¶188; see also In re: Flonase Antitrust Litig., 907 F.Supp.2d 637, 640 (E.D. Pa. 2012) (plaintiffs must show that a reasonable petitioner could not realistically expect merits success to strip a defendant of Noerr- 18 Specifically, Judge Nagle (docket no. 2015-01448-ZB) upheld the Township’s zoning approval to Carlino, which BVA appealed on February 6, 2017. In a separate matter pending in the Chester County Court of Common Pleas on February 22, 2017 (docket no. 2011-05037-MJ), Judge Nagle sanctioned BVA $57,042.00 to reimburse Carlino’s attorney’s fees and costs incurred to obtain BVA’s compliance with a prior court order. If anything, the record in state court only reveals that Carlino’s pursuit of certain litigation is anything other than a sham. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 25 of 32 19 ACTIVE\49042544.v1-5/22/17 Pennington immunity).19 Likewise, the condemnation proceeding is ongoing and BVA does not and cannot allege that the Township has no chance of prevailing there. Id. BVA obviously asserts conclusory sham litigation allegations because it knows that its antitrust claim is barred by the Noerr-Pennington doctrine. 2. “Other” purported conduct is not alleged to be illegal or improper. Plaintiff’s “other” allegations regarding Carlino’s purported conduct do not constitute anything violative of Section 1 of the Sherman Act. Carlino’s representatives allegedly making statements that it intends to open a supermarket does not rise to the level of anticompetitive conduct – if anything, Plaintiff’s complaints about Carlino’s “predatory” development demonstrate its own aversion to competition. See Brunswick Corp., 429 U.S. at 488 (“The antitrust laws were enacted for the protection of competition, not competitors.”). Carlino’s broker’s listing is also plainly not predatory because, on its face, it has nothing to do with Plaintiff. More importantly, the FAC nowhere pleads that any third party even saw the mistaken square footage number on the listing, much less was either misled by it or took any action in reliance upon it. Accordingly, the FAC inadequately pleads that any of these acts were unlawful, and none of them supports a Section I Sherman Act claim. G. The FAC is Silent Regarding the Individual Defendants. The FAC alleges that the Individual Defendants own the Watters Property. See FAC, ¶11. There are no allegations that any of the Individual Defendants engaged conduct violative of the Sherman Act. At most, BVA generically alleges that the agreement of sale, and, in particular, the obligation to cooperate with Carlino’s land development efforts and for Carlino to keep the 19 If Carlino could not realistically expect that its complaint would succeed on the merits (thereby engaging in sham litigation), the Chester County Court of Common Pleas would have sustained BVA’s preliminary objections. See Bayada Nurses, Inc. v. Comm., Dept. of Labor and Industry, 8 A.3d 866, 844 (Pa. 2010) (“Where it appears that the law will not permit recovery, the court may sustain preliminary objections in the nature of a demurrer.”). Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 26 of 32 20 ACTIVE\49042544.v1-5/22/17 Individual Defendants informed, is somehow legally offensive. See also footnote 18, supra. First, such boilerplate allegations cannot support a Section 1 claim. Second, there is still no allegations that any of the Individual Defendants affirmatively engaged in anti-competitive conduct. Count I should be dismissed as to the Individual Defendants for this reason alone. IV. PLAINTIFF FAILS TO STATE A CLAIM FOR UNFAIR COMPETITION (COUNT II AGAINST ALL DEFENDANTS)20 The Court should dismiss Count II of the FAC with prejudice because Plaintiff fails to state a claim for unfair competition. For such a claim, “a plaintiff must allege that it is in competition with the defendant—that is, that the plaintiff and the defendant supply similar goods or service.” Giordano v. Claudio, 714 F.Supp.2d 508, 523, (E.D. Pa. 2010) (denying a motion to dismiss where the parties provided similar services) (internal quotations and citation omitted). Here, Plaintiff fails to state a claim for unfair competition (like its failed Count I above) because Plaintiff fails to plead that Carlino (or any of the Individual Defendants) and Plaintiff compete in the Supermarket Market. See FAC, ¶ 37. Carlino is “a property developer,” not a supermarket. See FAC, ¶ 5. The Individual Defendants are property owners, not competitors in the relevant market. See FAC, ¶ 16. Because Plaintiff, Carlino, and the Individual Defendants do not compete in the gerrymandered relevant market, Plaintiff fails to state a claim for unfair competition.21 See Lundy Law, 2013 WL 6536739 at *7 (unfair competition claim dismissed because antitrust claim insufficiently plead). Count II should be dismissed. 20 This Court should refuse to exercise supplemental jurisdiction over state law claims if it dismisses Count I. See Sigmapharm, Inc. v. Mut. Pharmaceutical Co., 772 F.Supp. 2d 660 (E.D. Pa. 2011) (supplemental jurisdiction declined after dismissing Section 1 claim). 21 The tort of “unfair competition” typically involves “‘passing off’ of a rival's goods as one's own, creating confusion between one's own goods and the goods of one's rival,” but can also include “trademark, trade name, and patent rights infringement, misrepresentation, tortious interference with contract, improper inducement of another's employees, and unlawful use of confidential information.” Giordano v. Claudio, 714 F.Supp.2d at 521. Those types of allegations do not appear in the FAC. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 27 of 32 21 ACTIVE\49042544.v1-5/22/17 V. PLAINTIFF FAILS TO STATE A CLAIM FOR ABUSE OF PROCESS (COUNT III AGAINST CARLINO ONLY) In Count III of the FAC, Plaintiff alleges two distinct abuse of process theories. Plaintiff newly contends that Carlino’s mere initiation of the Carlino Tort Action constitutes an abuse of process. FAC, ¶¶ 223-24. Plaintiff separately re-states its meritless claim that Carlino committed abuse of process by filing an unsuccessful motion to intervene in the Township’s now concluded condemnation against BVA. FAC, ¶¶ 226-33. Count III should be dismissed because Plaintiff’s new claim is a misapplication of the law and the holdover still fails to offer anything more than threadbare, conclusory allegations that Carlino improperly used the legal process available to it. A claim for abuse of process is distinct from a claim of wrongful (or malicious) use of civil process. See G. Bochetto, D. Heim, J. O’Connell & R. Tintner, Wrongful Use of Civil Proceedings and Related Torts in Pennsylvania, §2.2 at 76-82 (1st Ed. 2016). The latter, now codified at 42 Pa.C.S. §8351 (Wrongful Use of Civil Proceedings), focuses on the improper initiation of a lawsuit where abuse of process focuses on wrongful use of process after lawsuit initiation. See, e.g., Langman v. Keystone Nat’l Bank & Trust Co., 672 F. Supp. 2d 691, 697 (E.D. Pa. 2009) (abuse of process claim previously dismissed because it focused on lawsuit initiation); Barakat v. Delaware Cty. Mem. Hosp., 1997 WL 381607 (July 2, 1997 E.D. Pa.) (abuse of process claim improperly focused on initiation of lawsuit; motion to dismiss granted); McGee v. Feege, 535 A.2d 1020, 1023 (Pa. 1987) (explaining distinction between abuse of process and wrongful use of process). “[T]o establish a claim for abuse of process it must be shown that the defendant (1) used a legal process against the plaintiff; (2) primarily to accomplish a purpose for which the process was not designed; and (3) harm has been caused to the plaintiff.” Levin v. Upper Makefield Twp., Bucks Cty., Pa., 90 Fed. App’x 653, 665-665 (3d Cir. 2004) (quoting Shiner v. Moriarty, 706 A.2d 1228, 1236 (Pa. Super. 1998)). “In support of this claim, a plaintiff must show some definite act Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 28 of 32 22 ACTIVE\49042544.v1-5/22/17 or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process, and there is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.” Id. “[T]he point of liability is reached when the utilization of the procedure for the purpose for which it was designed becomes so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure.” Naythons v. Stradley, Ronon, Stevens & Young, LLP, 2008 WL 1914750 at *6 (E.D. Pa. Apr. 30, 2008) (citing Gen. Refractories Co. v. Fireman's Fund Ins. Co., 337 F.3d 297, 308 (3d Cir. 2003)). Plaintiff failed to state a plausible abuse of process claim. A. Plaintiff Fails To State A Claim Regarding The Carlino Tort Action. Plaintiff has conflated abuse of process with wrongful use of process (i.e., wrongful use of civil proceedings). Plaintiff alleges, “Carlino brought and has maintained the sham Carlino Tort Action wholly for an improper purpose and without a legitimate basis in law or fact . . . .” FAC, ¶ 223 (emphasis added). Plaintiff further alleges that the “Carlino Tort Action was also brought for equally improper anticompetitive purposes.” Id., at ¶ 224 (emphasis added). That is a wrongful use of civil proceedings claim (not an abuse of process) because it focuses on the mere initiation of the Carlino Tort Action and should, therefore, be dismissed. See Langman and Barakat. B. Plaintiff Fails To State A Claim Regarding The Condemnation Action. Plaintiff also still failed to plead facts that, if proven, would establish an improper purpose, i.e., that Carlino’s utilization of the intervention procedure was “so lacking in justification as to lose its legitimate function as a reasonably justifiable litigation procedure.” FAC, ¶¶ 226-234. Moving to intervene is a procedure explicitly authorized by Pennsylvania Rule of Civil Procedure 2327. It is undisputed – and indeed explicitly alleged in the FAC – that Carlino had and has a beneficial ownership interest in property that would be benefitted by the condemnation. Id., ¶¶ 6(d) and 11. Thus, the issue for the state court was whether this beneficial interest was enough of Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 29 of 32 23 ACTIVE\49042544.v1-5/22/17 an “interest” for intervention purposes. The court decided it was not. Carlino did not appeal. On these facts, no plausible abuse of process claim could be based on Plaintiff’s mere allegation that Carlino’s true motive to intervene was to pressure Plaintiff financially. Id., ¶228. Importantly, “there is no liability where the defendant has done nothing more than carry out the process to its authorized conclusion, even though with bad intentions.” Levin, 90 Fed. App’x at 665-665. Plaintiff fails to plead that Carlino made “a definite act or threat not authorized by the process” or that Carlino did anything “more than carry out the process to its authorized conclusion.” Id. Plaintiff has also still failed to plead cognizable harm. The FAC only alleges that Carlino harmed Plaintiff “by requiring it to expend funds needlessly in opposition to the baseless petition [to intervene].” FAC, ¶ 233. Incurring attorneys’ fees to oppose Carlino’s petition does not constitute the type of harm necessary to maintain an abuse of process claim. See Tomalonis v. Levant, 2005 WL 1677555 at *2-*3 (Pa. Super. May 10, 2005) (responsibility for attorneys’ fees does not constitute harm necessary for abuse of process); Lundy Law, 2013 WL 6536739 at *8 (abuse of process claim dismissed -- allegations defendant took steps to increase costs beyond necessary defense costs not perversion of litigation process). Count III must be dismissed. VI. PLAINTIFF FAILS TO STATE A CLAIM FOR SPECIFIC PERFORMANCE (COUNT IV AGAINST CARLINO AND INDIVIDUAL DEFENDANTS) The Court should dismiss Count IV of the FAC with prejudice because Plaintiff fails to state a claim entitling it to specific performance of the Cross Easement Agreement. “[S]pecific performance is an equitable remedy for breach of contract permitting the court ‘to compel performance of a contract when there exists in the contract an agreement between the parties as to the nature of the performance.’” Giordano v. Claudio, 714 F.Supp.2d 508, 532 (E.D. Pa. 2010) (specific performance claim failed because no contract between the parties) (citing Lackner v. Glosser, 892 A.2d 21, 31 (Pa. Super. 2006)) (emphasis added). Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 30 of 32 24 ACTIVE\49042544.v1-5/22/17 Because Carlino is not a party to the Cross Easement Agreement, Plaintiff cannot state a claim for specific performance against Carlino. See Ruth v. Crane, 392 F. Supp. 724, 733 (E.D. Pa. 1975) (“To entitle a party to a decree of specific performance, the contract must be mutual and both parties must have the right to compel specific performance.”). Plaintiff also fails to allege any wrongful conduct by the Individual Defendants regarding the Cross Easement Agreement. See FAC, ¶¶ 235-41. Therefore, Plaintiff fails to state a claim for specific performance.22 VII. PLAINTIFF FAILS TO STATE A CLAIM FOR BREACH OF CONTRACT (COUNT V AGAINST THE INDIVIDUAL DEFENDANTS) The Court should dismiss Count V of the FAC with prejudice because Plaintiff fails to state any claim for breach of contract against the Individual Defendants. Plaintiff must plead: “(1) the existence of a contract, including its essential terms; (2) a breach of duty imposed by the contract; and (3) damages.” Ware v. Rodale Press, Inc., 322 F.3d 218, 225-226 (3d Cir. 2003) (citing CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa. Super. 1999)). BVA fails to state a breach of contract claim because it fails to allege any acts of the Individual Defendants that allegedly breached a contract. See FAC, ¶¶ 243-48. Plaintiff only alleges that the Individual Defendants owned the Watters Property. See FAC, ¶ 244. Although Plaintiff alleges in conclusory fashion that Carlino engaged in purportedly wrongful conduct (see FAC, ¶ 245), Plaintiff fails to allege any action by the Individual Defendants (wrongful or otherwise), other than their mere property ownership. See FAC, ¶¶ 243-48. Plaintiff added allegations in the FAC that, because the agreement of sale with Carlino required Carlino to keep the Individual Defendants informed about its land development efforts, the Individual Defendants 22 In addition, the Cross Easement Agreement is already the subject of competing declaratory relief claims in state court. See Chester County C.C.P. Docket No. 2011-05037-MJ. Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 31 of 32 25 ACTIVE\49042544.v1-5/22/17 were somehow obligated to prevent Carlino’s alleged wrongful conduct. See FAC, ¶ 246.23 First, the FAC has still not identified any term in the Cross Easement Agreement that the Individual Defendants allegedly breached. Second, BVA has not identified anything in that agreement that imposed any such duty on the Individual Defendants. See Scocca v. Cendant Mortgage Corp., 2004 WL 2536837, *1 (Nov. 9, 2004 E.D. Pa.) (breach of contract claim dismissed; no contractual duty plead requiring defendant to prevent judicial tax sale). Without duty and breach allegations involving the Cross Easement Agreement, Plaintiff fails to state a breach of contract claim. VIII. CONCLUSION For the reasons set forth above, defendants, Carlino East Brandywine, L.P., Christina Watters, Katherine Kettlety, Frank Watters, and Thomas Watters, respectfully request that the Court dismiss all claims against them in Plaintiff’s First Amended Complaint with prejudice. Respectfully submitted, /s/ Michael Eidel Michael Eidel Joshua Horn FOX ROTHSCHILD LLP 2000 Market Street, 20th Floor Philadelphia, PA 19103 (215) 299-2000 meidel@foxrothschild.com jhorn@foxrothschild.com Attorneys for Defendants Carlino East Brandywine, L.P., Christina Watters, Katherine Kettlety, Frank Watters, and Thomas Watters Dated: May 22, 2017 23 This new allegation seems to suggest that the Individual Defendants’ failure to stop Carlino’s alleged wrongful acts somehow interfered with the Cross Easement Agreement. As such, this count independently fails because a party cannot tortiously interfere with its own contract. See Fidelity Nat. Title Ins. Co. v. Vincent E. Craven, Jr., 2016 WL 215068, *10-11 (Jan. 19, 2016 E.D. Pa.) (claim dismissed; a party to contract cannot tortiously interfere with its own contract). Case 5:16-cv-05209-JLS Document 113 Filed 05/24/17 Page 32 of 32