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Plaintiff Jes Properties was
denied permission to hold an “A” hunter/jumper show by defendant USA
Equestrian because a show had been previously scheduled for the same date within
250 miles of the plaintiff’s proposed show.
This lawsuit was brought on various anti-trust theories, claiming that
the mileage rule is anti-competitive and illegal. In this trial court opinion,
the court grants the defendants’ motions to dismiss the complaint because it
did not allege valid anti-trust grounds for relief.
I. Background
Plaintiff JES Properties, Inc.
d/b/a/ Cypress Trails Farm (hereinafter "Cypress Trails") is a Florida
corporation which owns real property in Hillsborough County, Florida where it
holds horse shows. See Complaint ¶ ¶
3 and 38. Plaintiff Michael W. Gallagher ("Gallagher") is a natural
person residing in Florida who promotes horse shows.
See Complaint ¶ ¶ 4 and 39.
Defendant, USA Equestrian, Inc.
(the "Federation") is a New York not‑for‑ profit
corporation that has more than 80,000 members ("Members") and annually
recognizes more than 2,800 horse shows nationwide ("Recognized Horse
Shows"). The Federation governs all aspects of Recognized Horse Shows,
including educating and licensing all judges, stewards, and technical delegates
who officiate at Recognized Horse Shows. On an annual basis, the Federation
provides its Members a Competition calendar which lists the Federation's
Recognized Horse Shows for the year. See
Complaint ¶ ¶ 5 and 6. The Federation writes and enforces its national rules
("Federation Rules") which govern the breeds and disciplines of
Recognized Horse Shows. The Federation Rules may only be used by Federation
Recognized Horse Shows, or by a non‑recognized horse show with the
Federation's prior written permission.
Chapter IV, entitled
"Competition" of Rule II of the Federation Rules
("Competition Rules") sets forth how a Recognized Horse Show is
established. Article 208 of the Competition Rules sets forth the privileges of
being a Recognized Horse Show ("Horse Show Privileges"). Article 210
of the Competition Rules entitled "General" sets forth how one makes
an application to become a Recognized Horse Show. Article 212 of the Competition
Rules entitled "Procedures" sets forth the procedures a party must
follow to secure dates to hold a Recognized Horse Show.
See Complaint ¶ ¶ 29, 31, 31 and 32.
Particularly at issue in the
present case is the Federation's limitations on the permissible distances
between different classifications of Recognized Horse Shows. Article 214 of the
Competition Rules entitled "Mileage" sets forth the Federation's
mileage limitations ("Mileage Rule"). The Mileage Rule provides that
in the States of Maine, New Hampshire, Vermont, Connecticut, Rhode Island, New
Jersey, New York and Pennsylvania, it is not permissible for two "A"
rated hunter/jumper Recognized Horse Shows to be held on the same dates within
125 miles of each other unless permission is given by the first horse show to
become a Recognized Horse Show to the second horse show wishing to become a
Recognized Horse Show. The Mileage Rule provides that in all other States,
"A" rated hunter/jumper horse shows must be held at least 250 miles
apart absent obtaining a waiver by the first horse show to become a Recognized
Horse Show to the second horse show wishing to become a Recognized Horse Show.
See Complaint ¶ ¶ 33, 34 and 35. Certain events are exempted from the
Mileage Rule. See Complaint ¶ 36.
The Burton Defendants put on or
manage "A" rated hunter and jumper Recognized Horse Shows in the State
of Florida. See Complaint ¶ ¶ 9, 10,
11 and 12. Defendant, the Classic Company, Ltd. is in the business of managing
and producing "A" rated hunter and jumper Recognized Horse Shows in
the State of Florida. See Complaint ¶
13. Defendant Bob Bell is a natural person who acts as a manager and/or promoter
of "A" rated hunter and jumper Recognized Horse Shows in the State of
Florida. See Complaint ¶ 14.
Defendant Hodges is a natural person who acts as a promoter of "A"
rated hunter and jumper Recognized Horse Shows in the State of Florida.
See Complaint ¶ 15.
Plaintiffs state that it was
their intent to promote "A" rated hunter and jumper Recognized Horse
Shows at which different exhibitors can compete.
See Complaint ¶ 39. The Plaintiffs attempted to secure dates from the
Federation to hold "A" rated hunter and jumper Recognized Horse Shows
on certain dates and at certain locations.
See Complaint ¶ 40. During 2000, 2001, 2002 and 2003, Plaintiff Cypress
Trails applied for certain dates and locations to hold "A" rated
hunter and jumper Recognized Horse Shows. The Federation denied certain dates
and locations which Cypress Trails applied for on the basis that the Federation
had already approved another promoter those dates for locations within 250 miles
of the locations for which Cypress Trails had applied (the "Cypress Trails
Refusal Dates"). See Complaint ¶
41. Likewise, during 2000, 2001, 2002 and 2003, Plaintiff Gallagher applied for
certain dates and locations to hold "A" rated hunter and jumper
Recognized Horse Shows which would be recognized by the Federation. The
Federation denied certain dates and locations which Gallagher applied for on the
basis that the Federation had already approved another promoter for those dates
for locations within 250 miles of the location which Gallagher had applied (the
"Gallagher Refusal Dates") [FN2]. See
Complaint ¶ 42. Plaintiffs concede that the Federation approved some of the
dates and locations for which Cypress Trails and Gallagher applied.
FN2. The
Court notes that an "A" rated hunter and jumper Recognized Horse Show
apparently promoted by Plaintiff Cypress Trails was the basis of the
Federation's denial of Plaintiff Gallagher's proposed horse show dates for
12/14‑‑12/16/01 in Belleview, Florida.
Plaintiff Cypress Trails
attempted to seek written consent from the Burton Defendants, the Defendants
Bell and Defendant Hodges to hold its shows within 250 miles of their previously
approved shows but the Mileage Rule was not waived. See Complaint ¶ 45.
In their Complaint, Plaintiffs
assert that the Mileage Rule is one of the most destructive forces in the horse
show world today because it gives the Federation, horse show promoters and
managers a virtual monopoly over the ability to hold "A" rated hunter
and jumper Recognized Horse Shows. Plaintiffs assert that the Mileage Rule is a
restraint of trade and imposes an unreasonable restraint on competition.
See Complaint ¶ 61. Plaintiffs further allege that there is no logical
explanation to support the Federation maintaining different mileage distance
requirements in different states. Plaintiffs assert that with use of the Mileage
Rule, the Federation, the Burton Defendants, the Defendants Bell and Defendant
Hodges have prevented Plaintiffs from entering into the marketplace of
conducting "A" rated hunter and jumper Recognized Horse Shows.
See Complaint ¶ ¶ 46 and 47. Plaintiffs further allege that Defendants,
and other unnamed parties, possess a dominant market power to exclude
competitors conducting "A" rated hunter and jumper Recognized Horse
Shows. See Complaint ¶ ¶ 48 and 62.
Plaintiffs state that all of Defendants acted as part of a common scheme to
violate the antitrust laws which have an adverse effect on competition. See Complaint ¶ 50. More specifically, Plaintiffs assert that the
Mileage Rule prohibits new promoters like Cypress Trails and Gallagher from
entering the marketplace and that Cypress Trails and Gallagher are both the
target against which the antitrust activity is directed. See Complaint ¶ ¶ 51 and 53.
Defendants seek to dismiss
Plaintiffs' Complaint in its entirety. Count I raises claims of unreasonable
restraint of trade under section 1 of the Sherman Act. Count II raises claims of
monopolization and attempted monopolization under section 2 of the Sherman Act.
Count III, as pled, raises claims of conduct, practices and activities which
have the likelihood of substantially lessening competition, and did in fact
substantially lessen competition under section 7 of the Clayton Act. In its
Response to Motions to Dismiss, citing a scrivener's error, Plaintiffs request
leave to amend Count III to assert their claim under section 16 of the Clayton
Act.
II. Standard of Review for a Motion to Dismiss
In deciding a motion to dismiss,
the district court is required to view the complaint in the light most favorable
to the plaintiff. See Murphy v. Federal
Deposit Ins. Corp., 208 F.3d 959, 962 (11th Cir.2000)(citing
Kirby v. Siegelman, 195 F.3d 1285, 1289 (11th Cir.1999)). A complaint should
not be dismissed for failure to state a claim upon which relief can be granted
"unless it appears beyond doubt that the plaintiff can prove no set of
facts in support of his claim which would entitle him to relief."
Conley v.. Gibson, 355 U.S. 41, 45‑46 (1957). The Federal Rules of
Civil Procedure "do not require a claimant to set out in detail the facts
upon which he bases his claim." Id.
at 47. All that is required is "a short and plain statement of the
claim." Fed.R.Civ.P. 8(a)(2). The standard on a 12(b)(6) motion is not
whether the plaintiff will ultimately prevail in his or her theories, but
whether the allegations are sufficient to allow the plaintiff to conduct
discovery in an attempt to prove the allegations.
See Jackam v. Hospital Corp. of Am. Mideast, Ltd., 800 F.2d 1577, 1579 (11th
Cir.1986). The Federal Rules of Civil Procedure have adopted this
"simplified pleading" approach because of "the liberal
opportunity for discovery and other pretrial procedures ... to disclose more
precisely the basis of both claim and defense." Conley, 355 U.S. at 48. The purpose of notice pleading is to reach
a decision on the merits and to avoid turning pleading into "a game of
skill in which one misstep by counsel may be decisive to the outcome."
Id.
"To satisfy the requirements
of notice pleading in an antitrust complaint, 'enough data must be pleaded so
that each element of the alleged antitrust violation can be properly
identified." ' Boczar v. Manatee
Hospitals & Health Systems, Inc., 731 F.Supp. 1042, 1045 (M.D.Fla.1990)
( Quality Foods de Centro America, S.A. v.
Latin American Agribusiness Development Corp., S.A., 711 F.2d 989, 995 (11th
Cir.1983)). Rule 12(b)(6) dismissals are particularly disfavored in
fact‑intensive antitrust cases. See
Convad Communications Company v. Bell South Corporation, 299 F.3d 1272, 1279
(11th Cir.2002).
III. Discussion
Collectively, Defendants set
forth no less than five different grounds upon which their Motions to Dismiss
should be granted. Specifically, Defendants seek dismissal on the following
grounds: (1) Plaintiff Gallagher may not pursue an antitrust claim because he
fails to allege that he was denied a "Mileage Rule" waiver; (2)
Plaintiffs cannot proceed under section 7 of the Clayton Act as this case does
not involve mergers; (3) the Complaint fails to state a cause of action upon
which relief can be granted under section 1 of the Sherman Act; (4) the
Complaint fails to state a cause of action upon which relief can be granted
under section 2 of the Sherman Act and (5) the Court lacks subject matter
jurisdiction. The Court will address subject matter jurisdiction in its
discussion of section 1 of the Sherman Act.
1. Plaintiff Gallagher
The Burton Defendants assert that
Plaintiff Gallagher's claim against them is not ripe in that the Complaint fails
to allege that he requested and was refused a waiver of the "Mileage
Rule" by any of the Burton Defendants. Specifically, it is the Burton
Defendants' position that Plaintiff Gallagher alleges only that USA Equestrian
denied his applications for certain "A" rated hunter/jumper show dates
and locations. See Complaint ¶ ¶ 40,
42, Exhibit D. The Burton Defendants further state that having failed to comply
with USA Equestrian's procedures regarding obtaining a waiver of the
"Mileage Rule" requirements by a previously‑recognized promoter
of an "A" rated hunter/jumper recognized show, Plaintiff Gallagher
cannot proceed against any of the Burton Defendants. Similarly, Defendant Hodges
asserts that Gallagher has made no allegations of conduct against Hodges which
could give rise to an anti‑trust claim, and therefore, all of his claims
as to Defendant Hodges should be dismissed.
In Plaintiffs' Response to
Motions to Dismiss, Plaintiffs fail to address this ground for dismissal raised
by the Burton Defendants and Defendant Hodges. Since there is insufficient
information in the Complaint with respect to whether Plaintiff Gallagher
attempted to obtain a waiver of the Mileage Rule, the Court grants the Burton
Defendants and Defendant Hodges Motion to Dismiss as to Plaintiff Gallagher.
2. Section 7 of the Clayton Act
In Count III of the Complaint as
filed, Plaintiffs allege a violation of section
7 of the Clayton Act, 15 U.S.C. § 18. In their Motions to Dismiss all
Defendants move to dismiss Count III of the Complaint referring to the fact that
section 7 of the Clayton Act prohibits anti‑competitive mergers and
acquisitions. More specifically, the Burton Defendants, citing
Brunswick Corp. v. Pueblo Bowl‑O‑Mat, Inc., 429 U.S. 477, 485
(1977), state that "Section 7 prohibits those merger/acquisitions whose
effect 'may be to substantially lessen competition, or to tend to create a
monopoly ." ' All the Defendants correctly state that the Complaint is
devoid of any allegations relating to merger or acquisition activities.
In Plaintiffs' Response to
Motions to Dismiss, Plaintiffs state that as a result of a scrivener's error the
incorrect section was cited and the section cited should have been section 16 of
the Clayton Act. The Plaintiffs specifically request the Court permit the
Plaintiffs to assert their claim under section 16 of the Clayton Act.
Defendant USA Equestrian, Inc.
(the "Federation") filed a Reply Brief in Support of Motion to Dismiss
(Exhibit A to Document 26) addressing Plaintiffs' proposed section 16 claim. The
Burton Defendants' joined in the Federation's Reply Brief (Doc. 27). The
Defendants Bell subsequently joined in the Federation's Reply Brief (Doc. 29).
The Federation argues that
Plaintiffs' request to replead Count III as a separate claim should be denied.
First, the Federation argues that in the event the Court dismisses Plaintiffs'
substantive law claims under the Sherman Act, Plaintiffs' proposed Count III
would have to be dismissed as well. Second, the Federation argues that
Plaintiffs seek to invoke an improper pleading practice since section 16 of the
Clayton Act provides an injunctive remedy and therefore should be an element of
Plaintiffs' prayer for relief and not a separately plead claim. The Court
agrees. The Court finds Plaintiffs must plead their claim under section 16 of
the Clayton Act as part of their prayer for relief.
3. Section 1 of the Sherman Act
Section 1 of the Sherman Act
provides, in pertinent part, that "[e]very contract, combination in the
form of trust or otherwise, or conspiracy, in restraint of trade or commerce
among the several states, or with foreign nations, is hereby declared to be
illegal." 15 U.S.C. § 1. Broadly speaking, irrespective of the type of
activity challenged, certain elements must be pleaded and established to prove a
violation of section 1:(1) that a conspiracy exists between two or more entities
and (2) that the conspiracy unreasonably restrains trade.
See Boczar v. Manatee Hospitals & Health Systems, Inc., 731 F. Supp 1042
(M.D.Fla.1990); see also Weight‑Rite Golf Corporation, et al. v. United States
Golf Association, 766 F.Supp. 1104 (M.D.Fla.1991)(on motion for summary
judgment); Tucci v. Smoothie King
Franchises, Inc., 215 F.Supp.2d 1295 (M.D.Fla.2002). However, as discussed
below, the Court finds that Plaintiffs have not plead allegations that support
each of the elements of a section 1 violation of the Sherman Act.
a. Contract, Combination or
Conspiracy
All Defendants claim that
Plaintiffs fail to plead a contract, combination, or conspiracy under section 1
of the Sherman Act. The Court concurs. Section 1 of the Sherman Act does not
proscribe independent action by a single entity, regardless of its purpose or
effect on competition. Section 1 of the Sherman Act does not prohibit
independent business decisions but only prohibits concerted action and, thus,
requires some agreement express or implied between two or more persons. See
Moecker v. Honeywell International, Inc., 144 F.Supp.2d 1291, 1300
(M.D.Fla.2001) citing Monsanto Co. v. Spray‑Rite Serv. Corp., 465 U.S. 752, 761
(1984). Unilateral conduct is not illegal under a restraint of trade provision.
See Levine v. Central Florida Medical Affiliates, 72 F.3d 1538 (11th
Cir.1996). Because demonstrating concerted action is vital to establishing
liability under section 1, vague allegations of concerted action are vulnerable
to dismissal.
To state a cause of action for
civil conspiracy, a plaintiff must allege: (1) agreement between two or more
parties to achieve an illegal objective, (2) overt act in furtherance of that
illegal objective, and (3) resulting injury.
See Tucci v. Smootie King Franchises, Inc., 215 F.Supp.2d 1295, 1300
(M.D.Fla.2002)(citing Bivens Gardens
Office Bldg., Inc. v. Barnett Banks of Florida, Inc., 140 F.3d 898 (11th
Cir.1998)). It is only in rare cases that a plaintiff can establish a conspiracy
by showing an express agreement. Most conspiracies are inferred from the
behavior of the alleged conspirators. See
Moecker v. Honeywell International, Inc., 144 F.Supp.2d 1291,
1301(M.D.Fla.2001)(citing DeLong Equip,
Co. v. Washington Mills Abrasive Co., 887 F.2d 1499, 1515 (11th Cir.1989)).
There must be evidence that tends to exclude the possibility that the parties
were acting independently. There must be direct or circumstantial evidence that
reasonably tends to prove that the parties had a conscious commitment to a
common scheme designed to achieve an unlawful objective.
Monsanto Co., 465 U.S. at 764.
Plaintiffs' Complaint provides
"[a]ll of the Defendants acted as a part of a common scheme to violate the
antitrust laws which have an adverse effect on competition."
See Complaint ¶ 50. The Complaint does not state with any degree of
specificity the Defendants' alleged concerted conspiratorial conduct nor how the
Mileage Rule relates to Plaintiffs' section 1 claim. Nowhere does the Complaint
even allege that Defendants were conscious of each other's conduct nor that this
awareness was an element in their decision‑making process.
The present claim states only a
conclusory allegation that there was a conspiracy between the Defendants. A
conclusory allegation of conspiracy to restrain trade will not survive a motion
to dismiss. See Lombard's Inc. v. Prince
Manufacturing, Inc., 753 F.2d 974, 975 (11th Cir.1985)(citing
Larry R. George Sales Company v. Cool Attic Corp., 587 F.2d 266,
273‑74 (5th Cir.1979)). As pled there are no facts to support an inference
that there were concerted activities between or involving Defendants with
respect to the adoption or implementation of the "Mileage Rule."
b. Unreasonable Restraint of
Trade
The Federation also argues that
Count I should be dismissed because Plaintiffs fail to allege an injury to
competition as a whole in a properly defined relevant market‑‑as
opposed to an injury to Plaintiffs alone. Additionally, the Federation argues
that Count I fails to allege whether Plaintiffs are traveling under a per se theory or rule of reason. The Federation states that
"to the extent plaintiffs may attempt to travel under a
per se theory, dismissal is required as a matter of law".
See Hatley v. American Quarter Horse, Ass'n, 522 F.2d 646 (5th Cir.1977);
Cooney v. American Horse Shows Association, Inc., 495 F.Supp. 424, 431
(S.D.N.Y.1980); Ashley Meadows Farm, Inc. v. American Horse Shows Association, Inc.,
609 F.Supp.677 (S.D.N.Y.1985).
Not every agreement that
restrains competition will violate the Sherman Act. The Supreme Court has
determined that section 1 prohibits only those agreements that unreasonably restrain competition. See Levine v. Central Florida Medical Affiliates et al., 72 F.3d 1538,
1545 (11th Cir.1996)(citing Standard Oil
Co. v. United States, 221 U.S. 1, 58 ‑64, 31 S.Ct.502, 515‑517,
55 L.Ed. 619 (1911)). Two different methods of analyses are used to determine
whether the conspiracy unreasonably restrains trade: the rule of reason and the
per se rule. See Boczar v. Manatee Hospitals & Health Systems, Inc., 731
F.Supp. 1042, 1045 (M.D.Fla.1990); see
also Weight‑Rite Golf Corporation v. United States Golf Association,
766 F.Supp. 1104, 1108 (M.D.Fla.1991)(plaintiff must show that challenged
conduct will substantially restrain competition in relevant product market).
1. Per Se Violations
Per se illegality is limited to
four categories of trade restraints: (1) horizontal and vertical price fixing;
(2) horizontal market divisions; (3) group boycotts or concerted refusals to
deal; and (4) tying arrangements. See
Moecker v. Honeywell International, Inc., 144 F.Supp.2d 1291, 1301
(M.D.Fla.2001)(citing Seagood Trading
Corp. v. Jerrico, Inc., 924 F.2d 1555, 1567 (11th Cir.1991)). The Court
finds that Plaintiffs have failed to plead a
per se violation of the Sherman Act and therefore a "rule of
reason" analysis would be triggered. The presumption in cases brought under
section 1 of the Sherman Act is that the rule of reason standard applies.
Moecker, 144 F.Supp.2d at 1301.
2. Rule of Reason
Using the rule of reason analysis
for a claim under the restraint of trade section of the Sherman Act, a plaintiff
must allege that defendants' conduct had an impact upon competition in his
particular profession, not just upon his business, and that the alleged
restraint on trade was reasonably calculated to prejudice public interest.
See Tucci v. Smoothie King Franchises, Inc., 215 F.Supp.2d 1295, 1300
(M.D.Fla.2002)(citing Boczar v. Manatee Hospitals & Health Systems, Inc., 731 F.Supp
1042, 1046 (M.D.Fla.1990)(quoting Feldman
v. Jackson Memorial Hospital, 571 F.Supp. 1000, 1008 (S.D.Fla.1983)));
see also Retina Associates, P.A. V. Southern Baptist Hospital of Florida et al.,
105 F.3d 1376 (11th Cir.1997)((on summary judgment) requires proof that
defendant's conduct had anticompetitive effect in relevant market, either by
establishing actual anticompetitive effect or potential for genuine
anticompetitive effect in defined geographic and product markets, and that no
procompetitive rationale would justify conduct).
Showing injury to oneself as a
competitor is insufficient to show that challenged conduct will substantially
restrain competition in the relevant product market. See Weight‑Rite, 766 F.Supp. at 1100. The purpose of the
Sherman Antitrust Act is to protect competition, not individual competitors.
Boczar, 731 F.Supp. at 1045. See Brown
Shoe Co. v. U.S., 370 U.S. 294, 320 (1962). Plaintiffs fail to fully plead
how the Mileage Rule tends or is reasonably calculated to prejudice the public
interest and how it impacts competition among promoters of "A" rated
hunter and jumper Recognized Horse Shows.
To sustain a claim under the rule
of reason, the plaintiff must show: (1) that the defendant's conduct has an
anti‑competitive effect in the relevant market and (2) that there is no
pro‑competitive justification for the conduct.
See Moecker, 144 F.Supp.2d at 1301 (citing
Levine v. Central Florida Medical Affiliates et al., 72 F.3d 1538, 1551
(11th Cir.1996)). To satisfy these criteria, plaintiff must first define and
prove a relevant market, which consists of both relevant products and geographic
markets. See Moecker, 144 F.Supp.2d at
1302; see also All Care Nursing Services,
Inc. v. High Tech Staffing Services, Inc., 135 F.3d 740, 749 (11th
Cir.1998). Under section 1 of the Sherman Act, antitrust plaintiffs have burden
of defining relevant market. See Queen
City Pizza v. Domino's Pizza, Inc., 124 F.3d 420, 436 (3rd Cir.1997),
cert. denied, 523 U.S. 1059 (1998).
Plaintiffs' argue that the
relevant geographic market can be construed as the distance of 250 miles from
the "A" rated hunter and jumper Recognized Horse Shows put on by The
Burtons, Bob Bell, Classic and Hodges on the specific dates that the Plaintiffs'
were denied approval by the Federation. Plaintiff alternatively argues that the
relevant geographic market could also be considered as 250 miles from the
locations where Cypress Trails and Gallagher have applied to hold "A"
rated hunter and jumper Recognized Horse Shows. Plaintiffs further ague that the
relevant product market is the producing and holding of "A" rated
hunter and jumper Recognized Horse Shows.
While in most antitrust cases,
proper market definition can be determined only after factual inquiry into
commercial realities faced by consumers, there is not per se prohibition against
dismissal of antitrust claims for failure to plead relevant market.
See Queen City, 124 F.3d at 436. Where an antitrust plaintiff fails to
define its proposed relevant market with reference to rule of reasonable
interchangeability and cross‑elasticity of demand, or alleges a proposed
relevant market that clearly does not encompass all interchangeable substitute
products even when all factual inferences are granted in plaintiff's favor,
relevant market is legally insufficient and a motion to dismiss may be granted.
Id. Further, the geographic market in an antitrust action is defined by
considering commercial realities faced by consumers; it includes the geographic
area in which consumers can practically seek alternative sources of the product,
and it can be defined as market area in which seller operates. See Double D Spotting Service, Inc. v. Supervalu, Inc., 136 F.3d
554, 560 (8th Cir.1998)(citing Tampa Elec.
Co. v. Nashville Coal Co., 365 U.S. 320, 327 (1961)).
The Court finds that Plaintiffs
did not properly define a relevant market as required under a section 1 of the
Sherman Act rule of reason analysis. Specifically, Plaintiffs do not provide
rationale why the relevant product market should be defined as "A"
rated hunter and jumper Recognized Horse Shows. Plaintiffs fail to allege that
"A" rated hunter and jumper Recognized Horse Shows are unique or
explain why "A" rated hunter and jumper Recognized Horse Shows are not
part of the larger market for horse competitions. [FN9] Further, Plaintiffs fail
to delineate why the geographic market should be limited solely to the State of
Florida and not the South/Southeast or even the United States as a whole.
FN9. The
Court notes that there are several disciplines for which horse show competitions
are held and even within the hunter/jumper discipline there are several ratings
available for horse show competitions (e.g. AA, A, B and C).
c. Affects Interstate
Commerce/Subject Matter Jurisdiction
Although not always enunciated as
a required element of a section 1 claim in the Eleventh Circuit, another
statutory element of a claim under this section is that the challenged agreement
be in "restraint of trade or commerce among the several States." 15
U.S.C. § 1. Defendants Bell contend that the Court lacks subject matter
jurisdiction in the instant action because the relevant aspect of interstate
commerce is not identified. Specifically, Defendants Bell argue that the
requirement that a restraint on interstate commerce be present constitutes a
jurisdictional prerequisite for the assertion of federal jurisdiction.
Premature dismissals of antitrust
claims for lack of subject matter jurisdiction are not favored 'where the
factual and jurisdictional issues are completely intermeshed ...." '
Chatham Condominium Ass'ns v. Century Village, Inc., 597 F.2d 1002, 1011
(5th Cir.1979) (citations omitted); see
also Eaton v. Dorchester Development, Inc., 692 F.2d 727, 733 (11th
Cir.1982) (citations omitted). In such cases, the jurisdictional issues should
be deferred to the merits. See Chatham Condominium Ass'ns, 597 F .2d at 1011. Therefore, the
Court finds that a dismissal for lack of subject matter jurisdiction is
premature. However, for the reasons stated above, the Court finds that
Plaintiffs have not pleaded allegations that support the elements of a section 1
violation of the Sherman Act.
4. Section 2 of the Sherman Act
Defendants assert that it is
unclear from the Complaint as drafted in which monopoly‑related activities
Plaintiffs assert Defendants engaged, and under which theory or theories they
expect to recover.
Section 2 of the Sherman Act is
directed against "[e]very person who shall monopolize, or attempt to
monopolize, or combine or conspire with any other person or persons, to
monopolize any part of the trade or commerce among the several States .... 15
U.S.C. § 2. Broadly speaking, there are three distinct violations actionable
under section 2 of the Sherman Act: (1) monopolization; (2) attempt to
monopolize; and (3) conspiracy to monopolize. While the elements of
monopolization and attempted monopolization are different, they share a number
of common underlying principles. See
ABA Section of Antitrust Law, Antitrust Law Developments (5th ed.2002).
In Plaintiffs' Response they rely
heavily on Convad Communications Company
et al. v. Bellsouth Corporation, 299 F.3d 1272 (11th Cir.2002) to support
their contention that Count II states a Sherman Act section 2 claim and
therefore should not be dismissed. The Court notes that Plaintiffs rely only on
that portion of the opinion which provides the elements of a claim for
monopolization under section 2 of the Sherman Act. The Court thereby concludes
that Plaintiffs intended to proceed only under this theory. Therefore, the Court
will not address Defendants' arguments that Plaintiffs fail to allege any
concerted activity between or among Defendants as required for a section 2
conspiracy to monopolize claim.
To state a claim for
monopolization, plaintiff must establish: (1) possession of monopoly power in
the relevant market and (2) willful acquisition or maintenance of that power as
distinguished from growth or development as consequence of superior product,
business, acumen, or historic accident.
See Moecker., 144 F.Supp.2d 1291 at 1308 (citing United States v. Grinnell Corp., 384 U.S. 563, 570‑571
(1966)); see also Levine v. Central
Florida Medical Affiliates et al., 72 F.3d 1538, 1554 (11th Cir.1996).
A plaintiff bringing a
monopolization claim under section 2 of the Sherman Act must plead and prove the
relevant market as an element of the claim. See U.S. Anchor Manufacturing, Inc. v. Rule Industries, Inc., 7
F.3d 986, 994 (11th Cir.1993). Defining the relevant market, which is
plaintiff's burden, is essential to a monopolization claim. See Aquatherm Industries, Inc. v. Florida Power & Light Company,
971 F.Supp. 1419 (M.D.Fla.1997) affirmed
145 F.3d 1258 (11th Cir.1998). Under Eleventh Circuit law, the relevant market
is composed of product and geographic components. See Moecker, 144 F.Supp.2d at 1302. "The basic rule that
governs market definition was characterized by the Supreme Court as follows: In
considering what is the relevant market for determining the control of price and
competition, no more definite rule can be declared than that commodities
reasonably interchangeable by consumers for the same purpose make up that 'part
of the trade or commerce', monopolization of which may be illegal."
See
Moecker, 144 F.Supp.2d at 1303 (citing
United States v. E.I. du Pont de Nemours & Co., 351 U.S. 377, 395
(1956). Failure to allege either the product or geographic market in the
complaint is fatal to the plaintiff's claims.
See Aquatherm, 971 F.Supp. at 1425.
Relevant "product
market" for purposes of a monopolization claim under Sherman Trust Act must
include those products or services that are either identical to or substitutes
for defendants' product or service. Id. Additionally, "[t]he reasonable interchangeability ...
between a product and its substitutes" is an important consideration, as is
the cross‑elasticity of demand for the products. See Aquatherm, 971 F.Supp. at 1426 (citing U.S. Anchor Mfg., 7 F.3d at 995 (interchangeability)(citing
Brown Shoe Co. v. United States, 370 U.S. 294, 325, 82 S.Ct. 1502,
1523‑24, 8 L.Ed.2d 510 (1962))). The relevant "geographic
market" includes the area in which a potential buyer may rationally look
for the goods or services he or she seeks. See Aquatherm, 971 F.Supp. at 1427. The relevant market is the
"area of effective competition" in which competitors generally are
willing to compete for the consumer potential and not the market area of a
single company. See American Key
Corporation v. Cole National Corporation, 762 F.2d 1569, 1581 (11th
Cir.1985)(rejecting artificially narrow definition of relevant geographic
market)(citing Tampa Electric Company v.
Nashville Coal Co., 365 U.S. 320, 327‑29 (1961).
Defining a relevant market is
essential to establishing a monopolization claim under section 2 of the Sherman
Act. The criteria for establishing a relevant market under section 1 and section
2 is essentially the same. See Moecker,
144 F.Supp.2d at 1302 n7. Again, Plaintiffs do not provide rationale why the
relevant product market should be defined as "A" rated hunter and
jumper Recognized Horse Shows. Plaintiffs fail to allege that "A"
rated hunter and jumper Recognized Horse Shows are unique or explain why
"A" rated hunter and jumper Recognized Horse Shows are not part of the
larger market for horse competitions. Further, Plaintiffs fail to delineate why
the geographic market should be limited solely to the State of Florida and not
the South/Southeast or even the United States as a whole. Therefore, the Court
finds that Plaintiffs did not properly define a relevant market to sustain a
monopolization claim under section 2 of the Sherman Act.
"Monopoly power is defined
as the power to control prices or exclude competition." See Convad, 299 F.3d at 1283 (quoting E .I. du Pont de Nemours & Co., 351 U.S. at 391));
see also Grinnell Corp., 384 U.S. at 571. To make a determination as to
whether monopoly power exists, it is necessary to define the relevant market in
which the power over price or competition is alleged. Without a definition of
that market there is no way to measure a defendant's ability to lessen or
destroy competition. See Walker Process
Equipment, Inc. v. Food Machinery and Chemical Corporation, 382 U.S. 172,
177 (1965); see also Spectrum Sports, Inc.
v. Mcquillan, 506 U.S. 447, 459 (1993). As the Court has determined that
Plaintiffs have failed to define a relevant market, any analysis as to
Defendants' monopoly power, and the willful acquisition or maintenance of that
power, is premature. The Court finds that Plaintiffs' monopolization claim under
section 2 of the Sherman Act is insufficient to state a cause of action.
Having considered the motions,
and being otherwise fully advised, it is ORDERED AND ADJUDGED that:
(1) As to Plaintiff Gallagher,
the Burton Defendants and Defendant Hodges Motions to Dismiss (Doc. Nos. 16 and
21) are GRANTED;
(2) The Burton Defendants, the
Federation, the Bell Defendants and Defendant Hodges' Motions to Dismiss Counts
I, II and III (Doc. Nos. 16, 17, 18 and 21) are GRANTED; and
(3) The Bell Defendants' Motion
for More Definite Statement (Doc. No. 18) is DENIED AS MOOT;
(4) Plaintiffs are granted leave
to amend the Complaint. Plaintiffs shall file and serve the Amended Complaint on
or before April 18, 2003. Failure to do so shall result in this case being
dismissed with prejudice.
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