Antitrust Law Daily Dismissal of bid rigging claim involving church’s property lease affirmed
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Monday, August 12, 2019

Dismissal of bid rigging claim involving church’s property lease affirmed

By Robert B. Barnett Jr., J.D.

The Tenth Circuit also granted sanctions of double the church’s costs in an appeal that was deemed completely frivolous, even for a party acting pro se.

In a suit involving a church’s decision not to renew a couple’s lease on a small lot when it sold its huge New Mexico property to a third party, the couples’ bid rigging claim was properly dismissed by the trial court because (1) the couple failed to plead facts showing that the companies alleged to have engaged in the bid rigging had a conscious commitment to a common scheme designed to achieve an unlawful objective and (2) the couple asserted no antitrust injury, given that the alleged injuries were to them rather than to competition. The U.S. Court of Appeals in Denver also granted the church’s motion for sanctions for double its costs, ruling that the couple, suing pro se, had filed a completely frivolous appeal (Tompkins v. LifeWay Christian Resources of the Southern Baptist Convention, August 9, 2019, Phillips, G.).

Background. L. Kirk and Susie Tompkins built a home and lived in it for 16 years under a lease agreement on a single lot on a 2,400-acre tract in New Mexico owned by the LifeWay Christian Resources of the Southern Baptist Convention. The large tract was mostly used for Christian conferences, retreats, and camps. Under its lease agreement with the couple, LifeWay had the right to terminate the lease, including the right to purchase any improvements that the Tompkins had made on the lot. In 2013, LifeWay sold the property, called the Glorieta Conference Center, to Glorieta 2.0, Inc. for $1. At that point, they informed the Tompkins that they did not intend to renew their lease. Glorieta 2.0 offered them $84,999 for the improvements, but they declined the offer. The couple then sued LifeWay, Glorieta 2.0, and many of their individual directors and officers in New Mexico federal court.

The court dismissed the suit for various reasons, including lack of personal jurisdiction, lack of Article III standing, and failure to state a claim. The couple appealed that decision, and the Tenth Circuit affirmed. While the appeal was pending, LifeWay offered the couple $84,999 to settle the matter, the same figure that Glorieta 2.0 had offered them. They rejected the offer because they believed that it was well below market value. Shortly after the Tenth Circuit affirmed the decision, the couple filed a second suit, against mostly the same defendants.

The district court this time granted the motion to dismiss in part without prejudice. This new complaint for the first time contained a claim for bid-rigging in violation of Sherman Act §1. In effect, the couple contended that LifeWay’s decision not to buy the property was designed to leave Glorieta 2.0 as the only bidder, which resulted in a low-ball purchase offer to the couple. The couple then filed a motion to amend their complaint. LifeWay, Glorieta 2.0, and the others filed a motion for summary judgment, and they opposed the motion to amend. The court granted summary judgment to LifeWay, Glorieta 2.0, and the others, and it denied the couples’ motion for leave to amend. The reason for granting summary judgment was mostly a combination of issue preclusion and claim preclusion from the first suit. The new bid-rigging claim was dismissed because the complaint failed to show a common scheme or how the supposed scheme affected competition rather than a single market participant (the court also indicated that the claim could probably be dismissed for claim preclusion because the bid-rigging claim was really just one of the old claims using a new name). The court also ruled that the couple lacked standing to bring a Sherman Act claim for lack of antitrust injury because they never alleged that the conspiracy harmed the market as a whole, but only that they were harmed because Glorieta 2.0 offered them less than the market value for their home. The couple once again appealed to the Tenth Circuit.

Bid rigging claim. To prevail on Sherman Act claim, the lower court had said, a private plaintiff must allege a combination or some sort of concerted action between two legally distinct economic entities that constituted an unreasonable restraint of trade. They must also allege an antitrust injury because a plaintiff can only recover if the loss stems from a competition-reducing aspect of the defendant’s behavior. Calling the allegations "confusing," the lower court concluded that the couple was contending that LifeWay and Glorieta 2.0 agreed to unreasonably limit competition by having LifeWay not exercise its first right of refusal under the contract and then not offer to purchase the couples’ home. The court then concluded that the allegations were insufficient to state a bid-rigging claim under §1. There was no common scheme, no conscious commitment, and no unlawful objective.

The Tenth Circuit agreed with the lower court’s conclusions. The appellate court examined, one by one, the couples’ four assertions of error on appeal, and it found them all inadequate. For example, one assertion was that the couple was deprived of discovery, but nothing that the court could determine that they might have discovered could have changed the outcome. The couple also asserted, falsely, that the lower court’s dismissal of the bid-rigging claim was based on a conclusion that a private party cannot bring an antitrust suit. The lower court reached no such conclusion. The couple also argued that the dismissals in the first suit were not final judgments on the merits, which the Tenth Circuit said was an assertion wholly without merit.

Antitrust injury. The lower court had also concluded that the complaint lacked any allegation of an antitrust injury. No allegations existed that the alleged conspiracy harmed the market as a whole. Instead, it merely contended that the couple suffered because Glorieta 2.0 offered them less than the market value for their home. Therefore, the lower court concluded, the couple lacked standing under the Sherman Act to pursue their claim. The Tenth Circuit affirmed that conclusion.

Sanctions. LifeWay and Glorieta 2.0 filed a motion for sanctions, with a request that the court, if it did not issue sanctions, issue some sort of order prohibiting the couple was filing yet another lawsuit. The Tenth Circuit was perfectly comfortable issuing sanctions. Even allowing greater leeway to the couple because they were operating pro se, the Tenth Circuit called the appeal frivolous and said that sanctions were warranted. The court, therefore, awarded double the costs. Although it did not issue an order preventing the couple from filing yet again, it warned the couple that, if they filed another pleading in federal court arising out of the same dispute, this court would impose restrictions on their future ability to proceed pro se in any federal court in the Tenth Circuit.

With that, the court affirmed the lower court’s dismissal of the case with prejudice.

The case is No. 18-2187.

Attorneys: L. Kirk Tompkins, pro se. Luke W. Holmen (Modrall Sperling) for LifeWay Christian Resources of the Southern Baptist Convention.

Companies: LifeWay Christian Resources of the Southern Baptist Convention

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