### IN THE UNI TED STAT ES COURT OFAPPEALS FOR THE FIF TH CIRCU IT

No. 10-60844

GULF COAST HOTEL-MOTEL ASSOCIATION AND ITS SUCCESSOR MISSISSIPPI HOTEL & LODGING ASSOCIATION,
Plaintiff-Appellant,

v.
MISSISSIPPI GULF COAST GOLF COURSE ASSOCIATION; GULF HILLS GOLF CLUB, INCORPORATED; GREAT SOUTHERN GOLF CLUB, INCORPORATED; THE PASS CHRISTIAN ISLES GOLF CLUB, INCORPORATED; SUNKIST COUNTRY CLUB, INCORPORATED; SPE GO HOLDINGS, INCORPORATED, doing business as Great Oaks Golf, a wholly owned subsidiary of Textron Financial Corporation; DOGWOOD HILLS GOLF COURSE, INCORPORATED; PACIFIC LIFE INSURANCE COMPANY, doing business as The Oaks Golf Club,
Defendants-Appellees.

Appeal from the United States District Court for the Southern District of Mississippi

Before WIENER, CLEMENT, and ELROD, Circuit Judges. JENNIFER WALKER ELROD, Circuit Judge: This is an antitrust case involving a dispute between competing programs to sell vouchers for rounds of golf at golf courses along Mississippi’s Gulf Coast. U n i te d S ta te s C o u rt o f A p p ea l s

F i ft h C i rc u i t 

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The district court granted defendants-appellees motion to dismiss, deciding, in pertinent part, that the plaintiff-appel l ant had failed to allege the interstate

commerce element of a valid claim under the Sherman Act. We now REVERSE and REMAND for further proceedings consistent with this opinion. I. The plain t i f

f

- appellant, the Gulf Coast Hotel-Motel Association and its

successor Mississippi Hotel & Lodging Association (the “Hotel Association”) is

a trade association made up of hotels, motels, other lodging members, and golf

c o u r s es. As one of its services, the Hotel Association provides a golf v o u c h e r program for golf course members of the Hotel Ass o c i a t i o n . Through the program, individual golfers buy vouchers for rounds of golf from hotels or from companies that package golf tours. After the golfer turns in the voucher to the golf course and plays his or her round of golf, t h e golf course presents the validated voucher to the Hotel Association for payment. The Hotel Association collects the payment from the hotel or golf tour packager, and sends the money to th e go l f c o u rse. The Hotel Association keeps $1 per round of golf as an administrative fee. Thus, the Hotel Association’s role is essentially to act as an administrative middle-man for the voucher program. The complaint alleges in three separate paragraphs that golfers who buy the vouchers come to Mississippi from out-of-state:

The Go l f P a c k age Contracts require, in short, that the Hotel Ass o c i ation member golf courses honor the Hotel Association Golf Package Program tickets (i.e., vouchers ) p r e sented to them by the patro n s of the Hotel Association Lodgings/Golf Packagers for the reserved tee times, in lieu of payment of green and cart fees. These patrons and customers are comprised of out-of-state persons visiting

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the Mississippi Gulf Coast particip a t i n g in the voucher program. (emphasis added). Thus, the Defendant Golf Courses offer higher priced golf rounds to the Hotel Association voucher program, while offering lower rates to the Golf A s s ociation voucher program. The Defendant Golf Courses comprise a significant number of courses that are used by out-of-state visitors to the Mississippi Gulf Coast

. T h e Defendant Golf Courses’ and the Golf Association’s concerted eff o rts to monopolize the golf package market on the Mississippi Gulf Coast by offering higher rounds to programs other than the Golf Association’s program, specifically the Hotel Association’s program. (emphasis added).

The Hotel Association and the Golf Associati o n directly compete with each other through their golf package voucher program. The voucher programs of both associations service the region of the M ississippi Gulf Coast. The patrons and consumers who u s e a n d purchase the vouchers are comprised of out-of-state res i de nts who visit the Mississippi Gulf Coast. (emphasis added). The compl a i n t a l so alleges, without further elaboration, that the voucher program affects interstate commerce. The defendants-appelle es, the Mississippi Gulf Coast Golf Course Association and a number of Mississippi Gulf golf courses (togethe r , t h e “ Golf Association” ), are part of a competing voucher program. The Golf Association includes fifteen golf courses on Mississippi’s Gulf Coast. Some of those courses were, as of 2002, also members of the Hotel Association’s voucher program. In that year, the complaint alleges that the defendant golf cou r s e s threatened to withdraw from the H o t e l Association’s program unless the Hotel Association excluded non-Golf Association golf courses. The Hotel Association refused. In
response, the golf course defendants allegedly agreed to an exclusive agreement

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to work only with the Golf Associati o n voucher program. That exclusive agreement was enjoined as void and unenforceable by the Harris C o unty Chancery Court i n 2 0 0 3

. The complaint alleges that in response, the Golf Association and the defendan t go l f courses began acting in concert to prevent hotels from using the Hotel Association voucher program by providing the Hotel Association with higher quotes than provided to the Golf Assoc i a t ion voucher program. Thus, according to the complaint, a golfer looking to buy a voucher for

a round of golf on a course that is a member of both the Golf Association and the Hotel Association can buy that vouc h e r for substantially less money from the Golf Association than the Hotel Association. The Hotel As sociation filed suit alleging that the Golf Association’s decision to discriminate against the Hotel Association voucher program violated

s e c t i o n s 1 and 2 of the Sherman Act, section 2 of the Clayton Act, an d constituted various state law torts including tortious interference with business relations and contract. The Hotel Association asserted that the District Court had subject matter jurisdiction over its federal antitrust claims pursuant to 15 U.S.C. § 15(a) and 28 U.S.C. § 1331, and supplemental jurisdiction over its state law claims pursuant to 28 U.S.C. § 1367. The district court advised the Hotel Association that the complaint failed to articulate sufficient factual allegations establishing any affect on interstate

commerce. In response, the Hotel Association filed a First Amended Complaint and a Second Amended Complaint (the complaint at issue here). The Golf Associati o n filed a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6).

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The district court granted the motion, determining that it lacked subject matter jurisdiction over the Hotel Associ a t i o n ’s Sherman Act claims. The district court stated that federal subject matter jurisdiction under the Sherman Act and the Clayton Act requires “a showing of some nexus between Defendants’

c onduct and interstate commerce.” Gulf Coast Hotel-Motel Ass’n v. Mi s s . G u l f Coast Golf Course Ass’n , No. 1:08-CV-1430, 2010 WL 3168032, at *3 (S.D. Miss. Aug. 1 0 , 2 0 1 0 ). The district court first rejected the argument that the voucher sales were directly in interstate commerce. Therefore, the district court went 1

on to consider whether the Hotel Association had properly pleaded a substantial affect on interstate commerce for the purposes of Sherman Act jurisdiction. The district court concluded t hat the Hotel Association’s claims were insufficiently detailed, an d t h e r e fore dismissed those claims with prejudice. Finally, the district court exercised its discretion to dismiss the Hotel Association’s state law claims without prejudice, declining to exercise supplemental jurisdic ti o n over Hotel Association’s remaining state law claims. T h e H o t e l A s s o c i a t i o n moved for reconsideration, relying primarily on Cowan v. Corley , 814 F.2d 223 ( 5th Cir. 1987)—a case in which this court reinstated a complaint all e gi n g a Sherman Act claim arising out of a business providing a wrecker service on two major federal highways. I d

. a t 2 2 5

. The district court denied the motion for reconsideration. The Hotel Association timely appealed. II. The Hotel Association asserts that the district court erred in finding that it lacked subject matter jurisdiction over the Hotel Association’s Sherman Act

The Ho tel Ass ocia tio n doe s not app eal the dis tri ct cour t’ s Clayton Act dec isi on. 1 Argum ents not brie fed on app eal are wa ived. Uni ted States v. Thi bode aux , 211 F.3d 910, 912 (5t h Cir

. 2000)

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claims. The Hot el Association’s position is that its complaint pleaded a sufficient

c onnection to interstate commerce to survive a motion to dismiss. The G o l f Association contends in response that the complaint f ails because the complaint’s “conclusory allegations” did not “suffici e n tl y allege how the Hotel Association’s antitrust claims involved interstate commerce.” This court revi e w s a decision to dismiss for lack of subject matter jurisdiction de novo, applying the same standards as the district court. See DelRay Battery Co. v. Douglas Battery Co. , 635 F.3d 725 (5th Cir. 2011). U n d e r Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a “short and plain statement of the claim showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal , 129 S. Ct. 1937, 1949 (2009). Rule 8 does not require “detailed factual all e gations but it demands more than an unadorned, the-defendantunlawfully-harmed-me accusation.” Id. Thus, a complaint will survive a motion to dismiss if it contains “enough facts to state a claim to relief that is plausible

on its fa c e . ” Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007) (internal quotation omitted). A plainti ff meets this standard when it “pleads factual content that allo w s t he court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal , 129 S. Ct. at 1949. A complaint alleging a Sherman Act claim mu s t allege some nexus between the defendants’ conduct and interstate commerce. See 15 U.S.C. §§ 1, 3, 13; see also Summit Health, Ltd. v. Pinhas , 500 U.S. 322, 324-25 (199 1). In interpreting that “expansive” standard, however, we mu s t k e e p in mind “that when Congress passed t h e S h e r m an Act, it ‘left no area of its constitutional
power [over commerce] unoccupied.’” Summit Health, Ltd. , 500 U.S. at 329 n.10 quoting United States v. F ra n kf o r t Distilleries, Inc. , 324 U.S. 293, 298 (1945)

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(alteration in original). Thus, the reach of the act is coextensive with the reach of congressional power under the Commerce Clause of the Constitution. Id. at 500 U.S. at 328-29. T h e S upreme Court has broadly interpreted Congress’s authority under the Commerce Clause wi th respect to economic transactions. See, e.g, Gonzales v. Raich , 545 U.S. 1, 32 (2005) (upholding restrictions on the “intrastate, noncommercial cultivation, possession and use of marijuana” under Congress’s commerce clause power); Wickard v. Filburn , 317 U.S. 111, 128-29 (1942) (establishing Congress’s power to regulate purely local activities that are part of an economic class of activities that have a substantial effect on interstate commerce). However, the Court has limited the reach of the Commerce Clause with respect to non-economic activity. See United States v. Lopez , 514 U.S. 549, 567 (1995) (holding that a law making it a federal offense to knowingly possess
a firearm in a school zone exceeded Congress’s commerce clause authority); United States v. Morrison , 529 U.S. 598, 610, 6 1 7 ( 2 0 0 0 ) (holding that a law providing a federal civil remedy for victims of gender-motivated violence is unconstitutional in part because the law did not concern economic activity). We do not need to determine the limits of Congress’s Commerce Clause authority in this case in order to decide that the conduct alleged here—that is, bringing outof-state tourists to hotels to play golf—falls squarely within the Supreme Court’s Commerce Clause jurisprudence. 2 Indeed, subject matter jurisdiction based on the Commerce Clause “has, of course, long been interpreted to extend beyond activiti e s actually in interstate

As the Court expla ined in Lopez its elf, “inns and hote ls cat erin g to inte rs tat e gues ts ” 2
are one of the cat egori es of inte rs tat e com me rce . 514 U. S. at 559; See also Mo rri son , 529 U. S. at 609 (ob se rving that even intr ast ate eco nom ic act ivity is wi thin Congres s’ s com me rce claus e pow er wh ereits ubs tant ially aff ect s inte rs tat e c om me rce).

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commerce to reach other activities that, while wholly local in nature, nevertheless substantially affect interstate commerce.” Cowan , 814 F.2d at 226. Jurisdiction is not “defeated in a case relying on anticompetitive effects by plain ti f f’s failure to quantify the adverse impact of defendant’s conduct.” McLain , 444 U.S. at 243. Rather, the issue is whether, “as a matter of practical

eco no mic s , ” th e c o mplaint is sufficient to allege an affect on interstate commerce. Hosp. Bldg. Co. v. Trs. of Rex Hos. , 425 U.S. 738, 745 (1976). The Supreme Court has explained that courts should exercise caution in dismissing antitrust claims. Id. at 746; see also Twombly , 550 U.S. at 558 (contrasting due caution in dismissing an antitrust complaint with failing to insist upon some specificity in pleading). The Supreme Court’s opinion in Summit Health is instructive. There, an ophthalmologist claimed that a conspiracy to drive him o u t o f b u s iness by instituting fraudulent “peer re view” proceedings against him violated the Sherman Act. Id. at 324. Like the defendants here, the defendants claimed that the doctor had failed to s u fficiently plead the Sherman Act’s jurisdictional element because the alleged conspiracy was purely a local one affecting no more than one doctor and one hospital. Id. at 329-30. The Supreme Court disagreed, holding that if the conspiracy was successful, then “there will be a reduction in the provision of ophthalmological services in the Los Angeles m a r k e t .” Id. at 331. Thus, the Supreme Court concluded, “[w]e have no doubt concerning the
power of Congress to regulate a peer review process controlling access to the market for ophthal m o logical surgery in Los Angeles.” Id. at 333. As Justice Scalia noted in dissent, the Supreme Court looked to “whether the entire line of

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commerce fr o m w h i c h [the plaintiff] has been excluded affects interstate commerce.” Id. at 336. 3 Moreover, the Supreme Court has rep e a t e dly addressed the effects on interstate commerce of hotels, motels, and other elements of the hospitality industry. In Camps Newfound/Owatonna, Inc. v. Town of Harrison, Me. , 520 U.S. 564 (1997), for example, the Supreme Cou r t c o n s idered a dormant

commerce clause challenge to a tax that had a disparate impact on a camp with many out-of-state campers. Id

. at 572. The Supreme Court firmly rejected the argument that the dormant commerce clause was inapplicable, concluding that although summer camps and hotels are services that are consumed locally, they may have substantial effects on interstate commerce: Summer camps are comparable to hotels that offer the i r gu ests goods and services that are consumed locally. In Heart of Atlanta Motel Inc. v. United States, 379 U.S. 241 (1964), we recognized that interstate commerce is substantially affected by the activiti e s of a hotel that ‘solicits patronage from outside the State of G e o rgia through various national advertising media, inclu ding magazines of national circulation.’

. . . Even when b u siness activities are purely local, if it is interstate commerce that feels the pinch, it does not matter how local the operation which applies the squ e eze. Id. at 573-74. (internal quotation marks and citations omitted). As the Supreme Court concluded, even though the camp in that case did not “make a profit, it is unquest i o n ab ly engaged in commerce, not only as a

No part y here argues that Summ it He al th is no longergood lawin light of Tw om bly 3
or Iqbal

. Indeed , at leas t one of our sis ter cir cuit s has rec entl y reli ed on Summ it He al th to conc ludet hat a c om plai ny s uff icie ntly se t for th an eff ecton inters tat e com me rceby alle ging thatt he plai ntif

f wo uld pa rti cip ate in an inte rs tat e mar ke t forpatie nts

. See Yak im a Va lley Me m. H osp . v. StateDep ’t of H ea lth , -- - F.3d—, Nos

. 10-3 5497, 10- 35543, 201 1 WL 362 9895 (9t h Cir

. Aug. 19, 2001)

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purchaser, but also as a provider of goods a n d s e rvi ces.” 520 U.S. at 573 (internal citations omitted). To be sure, the Hotel Association’s complaint here—even after prompting by the district court—is sparse. What is alleged, however, is sufficient to survive

a motion to dismiss. The Supreme Court has explained that a mere “formulaic

rec it a t i o n of the elements” of a claim is insufficient to create a well-pleaded complaint. Iqbal , 129 S. Ct. a t 1 9 5 1

. Thus, it was not enough in Twombly to allege a “conspiracy”, 550 U.S. at 557, or in Iqbal to parrot the words needed to create a claim of constitutional discrimination, 129 S. Ct. at 1951

. Once shorn of such legal conclusions, the a llegations in those cases could not support an inference of liability—in Twombly , for example, the allegations of mi s conduct considered by the Supreme Court described a c o n s piracy that was factually i m plausible, 550 U.S. at 569, and in Iqbal , under the same analysis, th e allegations of the complaint were consistent with an “obvious alternative explanation” for t he arrests at issue. 129 S. Ct. at 1951. While the allegations in this complaint that the Golf Association’s anticompetitive acts “substantially affected interstate commerce” are not sufficient on their own, the complaint here read as a whole goes beyond the allegations rejected in Twombly and Iqbal

. 4 Specifi c a lly, the complaint here alleges that voucher customers “are comprised of out-of-state persons visiting the Mi s s i s s ippi Gulf Coast,” that the golf courses at issue are used by o u t

- o f

- s t ate visitors and that the Hotel Associ a ti on vouchers are sold through hotels and motels to patrons of those

The par tie s als o dis put e wh ethe r allegat ions mad e in brie fing can sup ple me nt the 4 allegat ions of a com plai nt. Becaus e we find that the allegat ions of this com plai nt are suf fic ient to allege subject mat ter juris dic tio n wi thou t ref ere nce to any fur ther info rm atio n pr ovide d in the brie fings , wed o n ot needt o d ecid e t hat ques tio n. 1 0 Case: 10-60844 Document: 00511614607 Page: 10 Date Filed: 09/27/201110-6 084 4

lodgings. Just as in Ca mps Newfound and Heart of Atlanta , it is a reasonable inference from those allegations to conclude that money was sen t a c r oss state lines, that tourists were attract e d t o the Mississippi Gulf Coast by the voucher program, and that if the alleged conspiracy were successful, consumers would not have the option of th e H o t e l Association’s voucher program. If it is true that these hotels and golf courses attract out-of-state visitors who participate in the Hotel Association’s voucher program, as the complaint alleges, then there can be

no doubt under both the Supreme Court’s and this court’s jurisprudence that the Hotel Association’s complaint stat e s a claim with respect to subject matter jurisdiction. See Iqbal , 129 S. Ct. at 1950 (“determining whether a c o mplaint states a plausible claim for relief will

. . . be a context specific task that requires the reviewing co u r t t o dr aw on its judicial experience and common sense.”); Camps Newfound , 520 U.S. at 573 (observing that a business which “necessarily g e n e r a t e s the transportation of persons across state lines that has long been recognized as a form of commerce.”); Hamilton Chapter of Alpha Delta Phi, Inc.

v. Hamilton Coll. , 128 F.3d 59, 66-67 (2d Cir. 1997) (finding s ubj e ct matter jurisdiction where college frat erniti e s all e ge d th at a c oll e ge ’ s efforts to monopolize
campus dining services affected interstate com m erce, because the college’s residential services are regularly performed for out-of-state students). O u r circuit’s precedents also support this result. In Cowan , the complaint concerned

a wrecker service involving two inte r state highways carrying substantial vehicular travel tr a f

f i c i n i n terstate travel. 814 F.2d at 224. Although the district court had concluded that the provision of wrecker service to t r a f f i c on those roads did not bear a sufficient relationship to interstate commerce, this court held that “[a]ctions directly related to the competitive p r i cing, marketing and furnishing of towing service to the interstate vehicular movement of people
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and good s . . . substantially affect interstate commerce.” Id. at 226. It is no
answer to say, as do defendants, that Cowan can be differentiated because it involved vehicular transport. As Camps Newfound and Heart of Atlanta teach, lodgings that attr act out

- of

- s t at e vi s itor s s ub s t anti ally affect interstate commerce just as much as the highway system that takes visitors from one state to another. In St. Bernard General Hospital, Inc. v. Hospital Service Assoc’n of New Orleans, Inc. , 712 F.2d 978, (5th Cir. 1 9 8 3 ), moreover, this court held that economic damages that affected a plaintiff’s ability to purchase supplies were sufficient to support antitrust jurisdiction. Id. at 984. In that case, we explained that even “an indirect impact upon interstate commerce is not to be tolerated.” Id. Here,

as the complaint states, guests come from out-of-state to play golf at the courses in question. If the allegations of the complaint are true—as we must assume at this stage—then the possible affect on interstate commerce under the precedent i n t h i s circuit is evident. As this court firmly held in Cowan , it cannot “b e gainsaid that travel to and through” a state “involves interstat e commerce.” Cowan , 814 F.2d at 226

. The other cases on which t h e defendants rely are inapposite. In Furlong

v. Long Island College Hospital , 710 F.2d 922 (2d Cir. 1983), a doctor complained that her employer had restrained trade by improperly limiting her right to practice medicine by fixing prices for medical care. The Second Circuit held that it was not enough to show t h a t “some aspects of a defendant’s business have a relationship to interstate commerce.” Id. at 926. Rather, “the inquiry must be whether the defendant’s activi t y that has been allegedly infected by unlawful conduct can be shown ‘as a m a t t e r o f practical economics’ to have a not insubstantial effect on the interstate commerce involved.” Id. Concluding that the pleaded facts were insufficient because the complaint included “no allegation
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of price-fixing” in any of its “operative language,” and because the plaintiff had failed to sho w a s ub stantial affect on interstate commerce of her own lost
revenue, the court dismissed the case with leave to replead in order to set forth the jurisdictional facts at issue with more clarity. Id. at 927-28. Even assuming that Furlong’s reasoning has survived Summit Health—which Justice Scalia’s dissent in Summit Health puts in qu estion, 500 U.S. at 335—the allegations of this complaint implicate interstate commerce far more dir e c tly than the attenuated allegations of the Furlong complaint. After all, the issue here turns

on the competition for out-of-state tourism dollars between two voucher consortiums, not whether some employment dispute might l e a d t o a marginal decrease in a defendant hosp i tal’s out-of-state purchasing. The Golf Association’s reliance on a Sixth Circuit case decided at the summary judgment stage, Stone v. William Beaumont Hospital , 782 F.2d 609 (6th Cir. 1986) is similarly misplaced. T h ere, the plaintiff’s entire allegation was that he was excluded from working at a local medical facility “two o r th r e e times a month.” Id. at 614. Upon review of “voluminous” pleadings, the court held that such deprivatio n s o nly had a “de minimus” impact on interstate commerce. Id. At 5

Hu elsm an v. Civ ic Center Corp

. , 873 F.2d 1171 (8th Cir. 1989) , anot her cas e dec ide d 5 bef ore Summ it He al th , is als o not per sua sive

. Th e r e, the plai ntif fs allege d that thei r sal es of conc es sio ns outs ide a st adiu m to pot enti ally out- of- st a t e fans wa s suf fic ient to sup por t subject mat ter juris dic tio n. Id. at 1173. That cour t, in dis mi ss ing wi thou t pr ejudi ce, agree d wi th def enda nts that “th e volum e of thes e pur chas es and sal es wa s so sm all that as a mat ter of pr act icaleconom ics , the re w as no s ubs tant ial eff ect on inte rs tat e com me rce .” Id. at 1175. The fac ts here , involving fif tee n golf cour se s and a variet y of hote ls and m ote ls, are quite dif fer ent. Indeed , the defen dant s donot even cont end th at theHot el Ass ocia tio n’s activit ies had an ins ubs tant ial eff ect on inte rs tat e com me rce—on ly that thos e allegat ions sho uld have been bett er ple ade d. 1 3 Case: 10-60844 Document: 00511614607 Page: 13 Date Filed: 09/27/201110-6 084 4

this stage, we cannot say that the Hotel As s ociation’s allegations are of such insignificance. 6 III. Because we find that the di s t r i ct court erred in dismissing the Hotel A s s o ciation’s case for lack of subject matter jurisdiction, we REVERSE and REMAND for further proceedings consistent with this opinion.

Becaus e we rever se on the bas is of the Di st ric t Court ’s dec isi on wi th res pec t to subject 6 mat ter juris dic tio n, we are n o t r e q uire d to— and do not—reac h the par tie s’ argum ents wi th res pec t to the othe r elem ents of a Sher manAc t clai m.

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