Opinion ID: 705929
Heading Depth: 3
Heading Rank: 2

Heading: Retail Shopping Center Market

Text: 22 The plaintiffs' antitrust allegations are not limited to the retail grocery market. They also allege that the defendants had conspired to restrain trade and to monopolize sales in the retail shopping center market. Here, the district court quite correctly determined that the plaintiffs, who are direct participants in this market, alleged an injury that is sufficiently direct to give them standing. 23 Section One of the Sherman Act prohibits the formation of any contract, combination ... or conspiracy in restraint of trade or commerce.... 15 U.S.C. Sec. 1. To establish a violation of Sec. 1 of the Sherman Act, plaintiffs must provide, therefore, evidence that tends to exclude the possibility of independent action by the [defendants]. Monsanto Co. v. Spray-Rite Serv. Corp., 465 U.S. 752, 768, 104 S.Ct. 1464, 1472, 79 L.Ed.2d 775 (1984). When a plaintiff relies on circumstantial evidence, as is very often the case, he must show that the inference of conspiracy is reasonable in light of the competing inference[ ] of independent action. Matsushita, 475 U.S. at 588, 106 S.Ct. at 1356; see Eastman Kodak Co. v. Image Technical Servs., Inc., 504 U.S. 451, 468, 112 S.Ct. 2072, 2083, 119 L.Ed.2d 265 (1992). Because there is often only a fine line separating unlawful concerted action from legitimate business practices, [c]onduct [that is] as consistent with permissible competition as with illegal conspiracy does not, standing alone, support an inference of antitrust conspiracy. Id. at 588, 106 S.Ct. at 1356. In Market Force, Inc. v. Wauwatosa Realty Co., 906 F.2d 1167 (7th Cir.1990), we set forth our approach to evaluating the legal sufficiency of the evidence in antitrust conspiracy cases. We first review the evidence of conspiracy submitted by the plaintiff. Next, we examine whether the defendants have offered evidence that tends to show that the conduct which forms the basis of the plaintiff's complaint is as compatible with the legitimate business activities of the plaintiff as it is with illegal conspiracy. Finally, if we determine that this analysis leaves the evidence of conspiracy ambiguous, we determine whether the plaintiff can point to any evidence that tends to exclude the possibility that the defendants were pursuing their legitimate independent interests. Id. at 1171-72. 24 Plaintiffs submit that Jewel and the Elk Crossing defendants engaged in a conspiracy to restrain trade in the retail shopping center market. They point out that both Jewel and the Elk Crossing defendants had a compelling motive to eliminate Grove Mall as a competitor. They also note that the Elk Crossing defendants built Elk Crossing without investigating the possibility that Grove Mall would be redeveloped and emerge as a competitor. They further point out that Jewel and the Elk Crossing defendants have built other shopping centers with Jewel as an anchor tenant, where Jewel obtained restrictions precluding the use of its old leasehold location as either a retail food store or a drug store. 25 Plaintiffs submit that defendants conspired to have Jewel anchor Elk Crossing while preventing a major anchor tenant from taking over Jewel's rental space in order to block Mr. Serfecz's attempt to redevelop Grove Mall. The anticompetitive conduct about which the plaintiffs complain involves two separate activities--Jewel's move to Elk Crossing and Jewel's attempted sublease to United Skates and refusal to relinquish its leasehold interest. The defendants have provided evidence showing that Jewel's move to Elk Crossing is compatible with their legitimate business interests. Jewel argues that its move to Elk Crossing was based upon legitimate business concerns; Elk Crossing offered Jewel a new, updated, and larger space and the ability to open a companion Osco drugstore; Jewel could not operate a drugstore in Grove Mall because Walgreens possessed the exclusive right to operate a drugstore at Grove Mall. The Elk Crossing defendants argue that their interest in Jewel is based upon the desirability of Jewel/Osco as an anchor tenant for a neighborhood shopping center. Elk Crossing and Jewel therefore have proffered legitimate business reasons for Jewel's decision to move to Elk Crossing and for Elk Crossing's desire to have Jewel as a tenant. 26 Jewel's actions relating to its Grove Mall lease are more problematic. The plaintiffs argue that Jewel attempted to sublet to United Skates in order to destroy Grove Mall as a retail shopping center because a roller rink anchor tenant is inconsistent with that use. The plaintiffs contend that Jewel, knowing that the lease prohibited subleases that would increase insurance rates absent the owner's consent, initiated the state declaratory judgment action in order to discourage potential retailers interested in subleasing the space and to tie up the plaintiffs in litigation. Jewel counters that its attempted sublease to United Skates was based on its desire to earn rent on the vacant space; it makes no argument, however, with regard to the continued payment of rent for the vacant space. Moreover, Jewel's explanation does not offer any legitimate business justification for its failure to minimize its rental payments on vacant space by accepting Mr. Serfecz's offer to pay United Skates rent or to release Jewel from the lease. Although this lack of explanation on Jewel's part may evidence an anticompetitive motivation on its part, it does not permit, by itself, an inference of a conspiracy on the part of Jewel with the owners of Elk Crossing. Absent some showing that Jewel has held onto its lease with Grove Mall because of an agreement with the Elk Crossing defendants, we cannot say that the record supports a violation of Sec. 1 of the Sherman Act. We therefore turn to the remainder of the plaintiffs' contentions in order to determine if they have demonstrated that the record raises a genuine issue of triable fact as to an agreement between Jewel and Elk Crossing. 27 We turn first to the evidence of motive. The plaintiffs argue that Jewel and the Elk Crossing defendants both had a compelling motive to destroy Grove Mall as a viable competitor. According to plaintiffs, the value of Elk Crossing is inflated because of a lack of alternate space and competitors. Therefore, the Elk Crossing owners have been able to charge high rental prices, obtain a multi-million dollar mortgage and permit the Elk Crossing partners to withdraw $7 million in excess value within two years after the mall was completed. The lack of competition also has permitted Jewel to reap the benefits of having a captive population because it is the only retail grocery store in the area. Both defendants certainly have a motive to pursue their respective economic objectives free of competition from a redeveloped Grove Mall. However, it is important to note that proof of motive is of limited utility in this context. Although a lack of motive may be evidence that parties did not conspire, the presence of an economic motive is of very little probative value. See Matsushita, 475 U.S. at 596-97, 106 S.Ct. at 1361 (Lack of motive bears on the range of permissible conclusions that might be drawn from ambiguous evidence: if petitioners had no rational economic motive to conspire, and if their conduct is consistent with other, equally plausible explanations, the conduct does not give rise to an inference of conspiracy.). The mere existence of mutual economic advantage, by itself, does not tend to exclude the possibility of independent, legitimate action and supplies no basis for inferring a conspiracy. Riverview Inves., Inc. v. Ottawa Community Improvement Corp., 899 F.2d 474, 483-84 (6th Cir.), cert. denied, 498 U.S. 855, 111 S.Ct. 151, 112 L.Ed.2d 117 (1990). We agree with the district court that the mere confluence of economic interests between the parties does not establish, standing alone, the existence of a conspiracy. 28 The plaintiffs next argue that defendants built Elk Crossing knowing that there would be no competition from Grove Mall. They presented testimony that one of the key concerns of a developer planning to build a shopping center is the presence of current or future competition. Kenneth Leonard, a real estate consultant, testified that he knew of no reputable, knowledgeable developer or chain store who did not consider the threat of competition a most important consideration when undertaking a development project. Neither Jewel nor the Elk Crossing defendants have produced evidence that a market analysis or feasibility study was conducted concerning possible future competition. 8 The Elk Crossing defendants argue that they had no incentive to do such a study or analysis and dispute the importance of conducting such studies. The failure of the Elk Crossing developers to take the precautionary step of undertaking a market study is not, in our view, sufficiently indicative in itself of an agreement to justify denial of summary judgment. This evidence could not support a jury finding of conspiracy between the Elk Crossing owners and Jewel. It raises, at best, the metaphysical doubt that Matsushita, 475 U.S. at 585, 106 S.Ct. at 1355, counsels is not sufficient to submit the issue to a jury. We agree with the district court that the fact that the defendants believed that Elk Crossing would be able to compete successfully with the less modern mall across the street does not supply a basis for inferring a conspiracy. 29 Plaintiffs also point to two instances in which Patrick F. Daly and his architectural firm have engaged in similar conduct with Jewel in developing other shopping centers. The first is the Hickory Hills shopping center. In 1985, Patrick F. Daly & Associates, Inc. was employed as the architectural firm for the shopping center, and Mr. Daly had an ownership interest in the development. Prior to the development of Hickory Hills, Jewel was located across the street and when Jewel moved it obtained a restriction on its former leasehold location. The second instance is the Scharrington Square shopping center in Schaumburg, Illinois. Patrick F. Daly & Associates, Inc. was employed as the architectural firm and Mr. Daly had an ownership interest in the development. 9 Prior to the development of Scharrington Square, Jewel had been located in a nearby shopping center. Jewel obtained a restriction on the old leasehold location so that the premise could not be leased to any person or entity whose primary business was either the retail sale of food or prescription drugs. 30 The plaintiffs can point to no evidence showing Daly's involvement with Jewel's negotiations of the lease restrictions. The fact that Daly's architectural firm has worked on a number of shopping centers that are anchored by Jewel and that Daly has invested in these shopping centers create an inference of Daly's ability to attract business more than it creates an inference of a conspiracy. 31 The plaintiffs describe their theory of the case in these terms: 32 [T]he Elk Crossing defendants have an on-going relationship with Jewel. The Elk Crossing defendants build and own new shopping centers in locations where Jewel has an old store nearby. Jewel moves into the new center and sterilizes the old location. 33 Appellants' Br. at 41. Plaintiffs have failed to connect Daly's actions with Jewel's actions, and neither set of actions, standing alone or in tandem, is evidence for inferring a conspiracy. 34 The evidence of record fails to show that, if the case were submitted to a trier of fact, there would be sufficient evidence to justify a judgment for the plaintiffs. Although, at the summary judgment stage, we must evaluate the record so as to give the nonmoving party the benefit of the doubt on all reasonable inferences that may be drawn from that record, we are not permitted to allow a case built on a metaphysical doubt to go to the jury. Matsushita, 475 U.S. at 586-87, 106 S.Ct. at 1356. Here the plaintiffs' case is built on a metaphysical doubt on a metaphysical doubt. There is simply no evidence that precludes the possibility of independent action. Id. at 597 n. 21, 106 S.Ct. at 1361 n. 21. In this context, the absence of that evidence deprives the plaintiffs of a reasonable case that would support a jury verdict. Alvord-Polk, Inc. v. F. Schumacher & Co., 37 F.3d 996, 1000-01 (3d Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 1691, 131 L.Ed.2d 556 (1995); see Eastman Kodak, 504 U.S. at 468-77, 112 S.Ct. at 2083-87.