Court Opinion

ID: 6991378
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:25:32.887439+00
Date Added: 2024-06-11T16:09:37.095183
License: Public Domain

MORAN, Senior District Judge
Yale College (Yale) requires all unmarried freshmen and sophomores under the age of 21 to reside in college dormitories, all of which are co-educational. The plaintiffs were Yale freshmen and sophomores when they brought this suit. They represent that as devout Orthodox Jews they cannot reside in those dormitories because to do so would conflict with their religious convictions and duties. Plaintiffs contend that Yale is a state actor or instrumentality and, therefore, the First, Fourth, and Fourteenth Amendments invalidate the parietal rule pursuant to 42 U.S.C. *84dard: only if (1) the government created the corporate entity by special law, (2) the government created the entity to further governmental objectives, and (3) the government retains “permanent authority to appoint a majority of the directors of the corporation” will the corporation be deemed a government entity for the purpose of the state action requirement. Id. at 400, 115 S.Ct. 961. See Barrios-Velazquez v. Asociacion de Empleados del Estado Libre Asociado de Puerto Rico, 84 F.3d 487, 492 (1st Cir.1996); Hall v. American Nat’l Red Cross, 86 F.3d 919, 921-922 (9th Cir.1996); American Bankers Mortgage Corp. v. Federal Home Loan Mortgage Corp., 75 F.3d 1401 (9th Cir.1996); Abu-Jamal v. National Pub. Radio, 1997 WL 527349, *4 (D.D.C. Aug.21, 1997), aff'd, 159 F.3d 635 (D.C.Cir.1998) (table). Here, the first two factors are easily satisfied: the State of Connecticut created the corporate entity by special law, and higher education is a governmental objective (although not the exclusive province of government). Two of nineteen board members is, however, a long way from control. *83§ 1983; that in any event they are entitled to discovery to explore the interrelationship between Yale and the governments of Connecticut and New Haven; that Yale’s mandatory on-campus housing requirement is both an attempt to monopolize a New Haven housing market in violation of § 2 of the Sherman Antitrust Act and a tying arrangement in violation of § 1 of that statute; and that Yale’s refusal to exempt religious observers from coeducational housing violates the Fair Housing Act, 41 U.S.C. § 3601 et seq.
The district court (Alfred V. Covello, C.J.) granted defendants’ motion to dismiss for failure to state a claim upon which relief can be granted, Hack v. President and Felloius of Yale College, 16 F.Supp.2d 183 (D.Conn.1998), and plaintiffs appealed. We affirm, with this judge dissenting in part, as explained in section III.B.
I
The threshold inquiry for plaintiffs’ constitutional claims is whether Yale can be considered a state actor or instrumentality acting under color of state law. The district court concluded that it could not. We agree.
What constitutes state action has been variously described by courts as “an extremely difficult question,” “murky waters,” “obdurate,” and a “protean concept,” see Krynicky v. University of Pittsburgh, 742 F.2d 94, 97 (3rd Cir.1984) (citations omitted), as the Supreme Court has grappled with differing factual circumstances, most recently in American Mfrs. Mwt. Ins. Co. v. Sullivan, 526 U.S. 40, 119 S.Ct. 977, 143 L.Ed.2d 130 (1999). The Court acknowledged in Lebron v. National RR Passenger Corp., 513 U.S. 374, 115 S.Ct. 961, 130 L.Ed.2d 902 (1995), that “[i]t is fair to say that ‘our cases deciding when private action might be deemed that of the state have not been a model of consistency.’” Id. at 378, 115 S.Ct. 961 (quoting Edmonson v. Leesville Concrete Co., 500 U.S. 614, 632, 111 S.Ct. 2077, 114 L.Ed.2d 660 (1991) (O’Connor, J., dissenting)). As in Lebrón, however, we need not “traverse that difficult terrain,” 513 U.S. at 378, 115 S.Ct. 961, because plaintiffs rely almost entirely upon Lebrón in contending that Yale is not, in reality, a private entity but is, rather, an agency or instrumentality of the State of Connecticut for the purpose of individual constitutional rights.
Plaintiffs begin by describing the significant interrelationships between Yale and the state from colonial days well into the latter nineteenth century. To that end they note that Yale is chartered by special legislation and, indeed, that charter is confirmed in the Connecticut Constitution. They contend that Yale was created to further public, governmental objectives, objectives that are equally valid today. Yale, they point out, must submit its budget and financial report to the Connecticut legislature. Finally,1 they argue that the presence of the Governor and Lieutenant Governor, as ex officio members of the nineteen-member “Fellows of Yale College” governing board, provides further support for the conclusion that Yale is a governmental entity.
In Lebrón, the Supreme Court determined that Amtrak was a governmental entity:
We hold that where, as here, the Government creates a corporation by special law, for the furtherance of governmental objectives, and retains for itself permanent authority to appoint a majority of the directors of that corporation, the corporation is part of the Government for purposes of the First Amendment.
Id. at 400, 115 S.Ct. 961. In the wake of Lebrón, other courts have concluded that the Court set forth a three-prong stan-
*84Plaintiffs contend that a three-prong test, with one prong requiring “majority” governmental control, is an overly simplistic reading of Lebrón. They argue that the two highest executive officers of the state are likely to be far more influential than other members, that they carry with them the aura of official action, and that their participation is at least as significant as the Presidential power to appoint a majority of Amtrak board members from specific lists of recommended private sector nominees. We disagree.
We think Lebrón means what it says. Indeed, the Court there contrasted Com-sat with Amtrak, noting that the President appointed only three of fifteen Comsat directors, 513 U.S. at 391, 115 S.Ct. 961, and describing it as a private corporation not government-controlled, id. at 397, 115 S.Ct. 961. Moreover, the Court has indicated its reluctance to have the federal courts indulge in evaluations of the effectiveness of governmental persuasion, absent government control. See San Francisco Arts & Athletics, Inc. v. United States Olympic Comm., 483 U.S. 522, 545-546 n. 27, 107 S.Ct. 2971, 97 L.Ed.2d 427 (1987). Plaintiffs do not suggest that Connecticut had any involvement in establishing Yale’s parietal rules. It is equally clear that the state could not control Yale’s policies and operations even if it chose to become involved. Yale, as a private university, did not act under color of law.
Alternatively, plaintiffs sought discovery about the interrelationships between Yale and the governments of Connecticut and New Haven, but the district court dismissed the complaint before any discovery could be initiated. Plaintiffs claim that a ruling before they had an opportunity to initiate discovery was in error. Again, we disagree.
The motion to dismiss tested the pleadings, and for the reasons we have stated we conclude that the allegations do not state a claim that Yale is a Lebrón state actor. We have assumed that the governor and lieutenant governor may have attended every board meeting and vigorously participated (although it may be that their role is largely symbolic, a vestigial reminder of a bygone era), but we think that irrelevant. Nor does plaintiffs’ contention that discovery might provide a basis for finding state action upon a different theory, such as that enunciated in Rendell-Baker v. Kohn, 457 U.S. 830, 102 S.Ct. 2764, 73 L.Ed.2d 418 (1982), provide a justification. In seeking reversal of the dismissal they do not argue that their present pleadings support such an alternative theory. Rather, their contention is more of the nature that through discovery something might turn up, and they are not at all specific about what that might be. The district court, however, was not required to wait for the exploration of such a speculative hope. We note, as well, that plaintiffs have pleaded a wealth of information about the College, and not surprisingly so. Yale is not some obscure organi*85zation largely unknown in the greater community. Government policies and interrelationships are not generally hidden from the public.
II
Plaintiffs further allege that Yale’s requirement that freshmen and sophomores reside in the dormitories is an attempt to monopolize the New Haven student housing market and that it is an illegal arrangement tying the provision of a Yale education to the purchase of unrelated housing services, all in violation of the Sherman Antitrust Act, 15 U.S.C. §§ 1 and 2.
We begin with the observation that if a parietal rule requiring some students to reside in college or university housing runs afoul of the antitrust laws, it has largely escaped the notice of the many colleges and universities across the country that have had and continue to have those rules and the notice of the millions of students who have attended those institutions in the more than a century since the Sherman Act was enacted. In Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton College, 128 F.3d 59, 64-65 (2d Cir.1997), we noted that only one reported case involved an antitrust challenge to university housing policies. And there, American Nat’l Bank & Trust Co. of Chicago v. Board of Regents for Regency Universities, 607 F.Supp. 845 (N.D.Ill.1984), parietal rules similar to those here were not even questioned.
When we speak of monopolization or attempted monopolization, we necessarily are talking about monopoly power within a relevant market. Plaintiffs, in their monopolization claim, are somewhat unclear about what constitutes the relevant market. They refer to student housing in New Haven, to the housing market for Yale students, and to non-subsidized rental housing in New Haven. We need not, however, seek to determine the relevant market upon which they purportedly rely because it is clear that their focus is upon a contractually created class of consumers: unmarried freshmen and sophomores below the age of 21. Plaintiffs do not claim, nor could they, that Yale controls non-Yale rental housing in New Haven, or that changes in the pricing of Yale housing or in other New Haven housing will have the slightest effect upon what those students will do. Yale does not control the supply of housing or student housing generally, but it does control the demand for some of it by its parietal rules. Economic power derived from contractual arrangements affecting a distinct class of consumers cannot serve as a basis for a monopolization claim. Queen City Pizza, Inc. v. Domino’s Pizza, Inc., 124 F.3d 430, 438 (3d Cir.1997); Rohlfing v. Manor Care, Inc., 172 F.R.D. 330, 345 (N.D.Ill.1997). If plaintiffs have any antitrust claim it necessarily is that Yale has coerced plaintiffs into accepting a tied product.
That claim, however, fails as well. The law was well-summarized in De Jesus v. Sears, Roebuck & Co., Inc., 87 F.3d 65, 70 (2d Cir.1996):
“A tying arrangement is ‘an agreement by a party to sell one product but only on the condition that the buyer also purchase! ] a different (or tied) product.’ ” Yentsch v. Texaco, Inc., 630 F.2d 46, 56 (2d Cir.1980) (quoting Northern Pac. Ry. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958)). “[T]he essential characteristic of an invalid tying arrangement lies in the seller’s exploitation of its control over the tying product to force the buyer into the purchase of a tied product that the buyer either did not want at all, or might have preferred to purchase elsewhere on different terms.” Jefferson Parish Hosp. Dist. No. 2 v. Hyde, 466 U.S. 2, 12, 104 S.Ct. 1551, 1558, 80 L.Ed.2d 2 (1984); see also Allen-Myland, Inc. v. IBM Corp., 33 F.3d 194, 200 (3d Cir.) cert. denied, 513 U.S. 1066, 115 S.Ct. 684, 130 L.Ed.2d 615 (1994).
*86As to the detailed requirements to state a tying claim—
[W]e have required allegations and proof of five specific elements before finding a tie illegal: first, a tying and a tied product; second, evidence of actual coercion by the seller that forced the buyer to accept the tied product; third, sufficient economic power in the tying product market to coerce purchaser acceptance of the tied product; fourth, anticompetitive effects in the tied market; and fifth, the involvement of a “not insubstantial” amount of interstate commerce in the “tied” market.
Gonzalez v. St. Margaret’s House Hous. Dev. Fund Corp., 880 F.2d 1514, 1516-17 (2d Cir.1989) (citing Yentsch, 630 F.2d at 56-57).
De Jesus, 87 F.3d at 70.
Plaintiffs contend that their dormitory housing is “tied” to their Yale education (the “tying” product) and that Yale has sufficient economic power in the educational market to coerce their payment for that housing. They allege that a Yale degree “has unique attributes that make it without substitute or equal,” including the access it provides to Yale’s alumni network and its “incomparable value to potential employers and graduate schools.” A Yale education, they contend, has advantages not shared by other institutions of higher learning and this is enough for a finding of sufficient market power in the tying product market — or, since they have so alleged, they are entitled to pursue the matter further through discovery.
The district court agreed that the uniqueness of a product can trigger a tying arrangement claim, see United States Steel Corp. v. Fortner Enterprises, Inc., 429 U.S. 610, 620-21, 97 S.Ct. 861, 51 L.Ed.2d 80 (1977), and so do we. That uniqueness can provide sufficient market power to compel a buyer to purchase a product he would not purchase in a competitive market. See Jefferson Parish, 466 U.S. at 16-17, 104 S.Ct. 1551; Lee v. Life Ins. Co. of North America, 23 F.3d 14, 16 (1st Cir. 1994). Where uniqueness is alleged, questions of market definition and market power will inevitably blend together because the relevant tying product market includes, by definition, only fungible products. “The outer boundaries of a product market are determined by the reasonable interchangeability of use or the cross-elasticity of demand between the product itself and substitutes for it.” Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502, 8 L.Ed.2d 510 (1962); see also Town Sound and Custom Tops, Inc. v. Chrysler Motors Corp., 959 F.2d 468, 479 (3rd Cir. 1992) (“If a defendant offers a unique and nonreplicable product, ... other products may not be adequate substitutes for it, and hence are not part of the same market.”). Plaintiffs argue, in effect, that the relevant product market is confined to a Yale education. To survive a motion to dismiss, however, the alleged tying product market must be plausible, see Toum Sound, 959 F.2d at 479 n. 12, and we agree with the district court that the market alleged here is not. See also Little Caesar Enterprises, Inc. v. Smith, 34 F.Supp.2d 459, 477 n. 30 (E.D.Mich.1998) (“Courts have consistently refused to consider one brand to be a relevant market of its own when the brand competes with other potential substitutes.”) (citing cases).
Plaintiffs insist that there is no substitute for a Yale education, that it is unique, and in a collegiate sense that is undoubtedly so. See Lee v. Life Ins. Co. of North America, 23 F.3d 14, 17 (1st Cir.1994) (considering “uniqueness” of the University of Rhode Island). The annual rankings of colleges and universities in U.S. News and World Report, however, illustrates the obvious: there are many institutions of higher learning providing superb educational opportunities. Those opportunities are not inherently local. Plaintiffs themselves allege that 92.5 percent of the 1997-1998 freshman class came from outside Connecticut. If some of them, including the plaintiffs, were dissatisfied with the *87Yale parietal rules, they could matriculate elsewhere. The antitrust implications of university housing rules do not depend upon a trier of fact deciding that some universities, or certain departments in some universities, are “unique” and others are not.
Hamilton Chapter of Alpha Delta Phi Inc. v. Hamilton College, supra, is not to the contrary. The court there never reached the relevant market issue, and, if it had, the considerations would have been quite different. Plaintiffs in Hamilton were “locked in” by their investment in housing which they could no longer use because of an abrupt change in policy. That might have raised the concerns voiced in Eastman Kodak Co. v. Image Technical Services, Inc., 504 U.S. 451, 112 S.Ct. 2072, 119 L.Ed.2d 265 (1992), but those concerns are not present here. Yale’s housing policies were fully disclosed long before plaintiffs applied for admission. They had no “lock-in” costs.
Ill
Plaintiffs further contend that Yale’s refusal to exempt religious observers from co-educational housing violates Title VIII of the Civil Rights Act of 1968, known as the Fair Housing Act, 42 U.S.C. § 3601 et seq. (“FHA” or “Title VIII”). The Fair Housing Act provides that “it shall be unlawful [t]o refuse to sell or rent ... or otherwise make unavailable or deny, a dwelling to any person because of ... religion.” 42 U.S.C. § 3604(a). The FHA also prohibits discrimination “in the terms, conditions, or privileges of sale or rental of a dwelling, or in the provision of services or facilities in connection therewith, because of ... religion.” 42 U.S.C. § 3604(b).
A. Standing under the Fair Housing Act
The district court did not reach the merits of plaintiffs’ Fair Housing Act claims because it concluded that the plaintiffs lacked standing. We disagree. The Act provides that “[a]n aggrieved person may commence a civil action in an appropriate United States district court....” 42 U.S.C. § 3613(a)(1)(A). A party is an “aggrieved person,” according to the definition in 42 U.S.C. § 3602(i)(l), if he or she “claims to have been injured by a discriminatory housing practice.” The Act requires only that the party “allege ‘injury in fact’ within the meaning of Article III of the [United States] Constitution, that is, that he allege ‘distinct and palpable injuries that are fairly traceable to [defendants’] actions.’ ” LeBlanc-Stemberg v. Fletcher, 67 F.3d 412, 424 (2d Cir.1995) (internal quotation marks omitted) (citing Havens Realty Corp. v. Coleman, 455 U.S. 363, 375-76, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982)). The Supreme Court has repeatedly directed the courts to give a “generous construction” to the Fair Housing Act. See, e.g., Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 211-212, 93 S.Ct. 364, 34 L.Ed.2d 415 (1972). “Congress intended standing under § 8122 to extend to the full limits of Art. Ill” and thus courts lack authority to create prudential barriers to standing under the Act. Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 103 n. 9, 109, 99 S.Ct. 1601, 60 L.Ed.2d 66 (1979); Havens Realty, 455 U.S. at 372, 102 S.Ct. 1114; see also Comer v. Cisneros, 37 F.3d 775, 788-89 (2d Cir.1994) (according plaintiffs “the broadest possible grounds for standing”); Harris v. Itzhaki 183 F.3d 1043, 1049-50 (9th Cir.1999) (same); Wilson v. Glenwood Intermountain Properties, Inc., 98 F.3d 590, 593 (10th Cir.1996) (same, but finding that a favorable decision could not redress the injury). As Havens Realty, Trafficante and Gladstone make clear, and as Le-Blanc-Stemberg explained, “[a]n injury need not be economic or tangible in order to confer standing.” LeBlanc-Stemberg, *8867 F.3d at 425 (citing Havens Realty, 455 U.S. at 376, 102 S.Ct. 1114).
The student plaintiffs claim a tangible, economic injury. Indeed, they do not seek to compel Yale to provide single-sex housing; they ask to be relieved of the burden of paying for rooms they contend are effectively “made unavailable” to them. We conclude that they have amply alleged injury in fact and, accordingly, have standing to pursue Fair Housing Act claims.

. Plaintiffs also refer to actions by Yale, the state, and New Haven, to accommodate Yale's large and tax exempt presence in New Haven. They do not, however, and they could not, claim that Yale is an instrumentality of New Haven, and we fail to see how those accommodations materially strengthen their Lebrón analysis.

. Section 812 of the Fair Housing Act of 1968, previously codified at 42 U.S.C. § 3612, has been repealed and replaced by 42 U.S.C. § 3613(a). See Pub.L. 100-430, § 8(2), Sept. 13, 1988, 102 Stat. 1625.