Court Opinion

ID: 5911961
Source: CourtListenerOpinion
Date Created: 2022-01-13 03:56:21.193196+00
Date Added: 2024-06-11T08:45:40.328204
License: Public Domain

Order of the Supreme Court, New York County (Shirley Fingerhood, J.), entered June 9, 1988, denying defendants’ motion to dismiss the repleaded complaint for failure to state a cause of action, affirmed, with costs.
This is an action under the Donnelly Act, General Business *353Law § 340 et seq. The plaintiffs are small businesses engaged in the retailing of accessories of interest to women, and the defendants organize and sponsor fashion and boutique shows held at the Javits Convention Center.
It is the plaintiffs’ contention that defendants control the exhibit space at the trade show to the detriment of the plaintiffs whose lifeblood depends on gaining some prominence at the exhibition.
We previously held as follows:
"A party claiming a violation of the Donnelly Act, which was modeled on the Federal Sherman Antitrust Act * * * must identify the relevant product market, describe the nature and effects of the purported conspiracy and allege how the economic impact of that conspiracy is to restrain trade in the market in question * * *. While the complaint herein sufficiently pleads these elements, there is one further requirement for a valid claim under the Donnelly Act, the lack of which renders plaintiffs’ third and fourth causes of action defective. As the Court of Appeals declared in State of New York v Mobil Oil Corp. * * * in discussing the type of contract or agreement deemed by the statute to constitute an unlawful restraint of trade, 'the term, "arrangement” * * * must be interpreted as contemplating a reciprocal relationship of commitment between two or more legal or economic entities similar to but not embraced within the more exacting terms, "contract”, "combination” or "conspiracy” ’. Thus, the Donnelly Act mandates that there be a conspiracy or reciprocal relationship between two or more entities before liability can be found * * *.
"In the instant situation, defendant Larkin-Pluznick-Larkin, Inc., doing business as National Fashion & Boutique Show, is a corporation of which the individual defendants are all officers or agents. Plaintiffs have failed to identify any alleged coconspirator(s) and may not remedy the defect in their complaint by asserting, in conclusory fashion, the existence of a generalized conspiracy arising out of defendants’ various contracts and arrangements or by referring to unilateral business actions taken by them * * *. Consequently, the third and fourth causes of action should be dismissed with leave to plaintiffs to replead in accordance with the foregoing.” (136 AD2d 461, 462.)
As the IAS court perceptively noted, the plaintiffs have now remedied the defect by specifying the favored exhibitors who have "conspired and entered into a reciprocal relationship *354with defendants. In Paragraph 27 [of the complaint] the defendants are alleged to have entered into a conspiracy with the favored exhibitors pursuant to which the latter guarantee sufficient payment in return for obtaining the most desirable locations; that the conspiracy is an unlawful arrangement for the fixing of fees and the allocation of exhibit space giving competitive advantage to one group of competitors over others and serving to exclude new competitors.”
Having complied with our directive, there is no need to analyze, as the dissent does, the possible evidentiary aspects which are more attuned to a motion for summary judgment than a motion to dismiss pursuant to CPLR 3211 (a) (7). Nonetheless, it should be pointed out that a vertical restraint is encompassed by the Donnelly Act. (See, Anheuser-Busch, Inc. v Abrams, 71 NY2d 327, 333.) .
In economics, time and place utility is of great consequence and, if, as here alleged, the small exhibitors are relegated to remote areas of the exhibition hall and not given an opportunity to compete for premium space, then there can be a violation of the Donnelly Act. (Cf., United States v Paramount Pictures, 334 US 131.) Concur—Kupferman, J. P., Ross and Smith, JJ.