WILLIAM J. MARTÍNEZ, District Judge.
This matter is before the Court on Defendant's Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(6) (ECF No. 23), and Plaintiff's Motion to Strike Exhibits A-D to Defendant's Motion to Dismiss (ECF No. 27). Both motions are fully briefed and ripe for adjudication. (See also ECF No. 28, 32-34.) For the following reasons, Defendant's Motion to Dismiss is DENIED and Plaintiff's Motion to Strike is GRANTED.
The following allegations, contained in Plaintiff's operative Amended Complaint, are accepted as true for purposes of Defendant's Motion to Dismiss. (See infra.)
This action arises from an allegedly anticompetitive agreement between Defendant Campus Village Apartments, LLC and non-party University of Colorado Denver ("UCD") creating a residential location restriction for certain UCD students ("the Agreement"). (ECF No. 19, ¶ 4.) Specifically, pursuant to the Agreement, most full-time domestic freshman and international students are required, during the first two semesters of their enrollment at UCD, to reside at Defendant's Campus Village Apartments complex, located approximately
In May 2005, in order to fund the construction of the Campus Village Apartments, Defendant issued $50.365 million in revenue bonds through the Colorado Educational and Cultural Facilities Authority ("CECFA"). (Id. ¶ 25.) The Official Statement for the bond issue made express reference to the residency requirement, and made clear that Defendant was the only entity obligated for repayment of the bonds. (Id.) Plaintiff states, on information and belief, that the residency restriction was designed to ensure minimum occupancy levels at Campus Village Apartments to enable Defendant to meet its payment obligations on the bonds issued to fund the project. (Id. ¶¶ 20, 30, 45.) Plaintiff also states, on information and belief, that UCD had no participation whatsoever in the bond offering. (Id. ¶ 26.)
The Complaint contains four claims for relief: (1) conspiracy to monopolize, in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; (2) civil conspiracy; (3) interference with prospective business relations; and (4) interference with existing contractual relations. (Id. ¶¶ 70-88.) Jurisdiction in this Court is based on federal question jurisdiction (under 28 U.S.C. § 1331) over the federal claim, and supplemental jurisdiction (under 28 U.S.C. § 1367(a)) over the state law claims. (Id. ¶ 10.)
Defendant now moves to dismiss the operative Amended Complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). It argues that it is entitled to dismissal of the Sherman Act claim based on the state action immunity doctrine, because the Agreement was authorized by a clearly articulated and affirmatively expressed state policy to replace competition with regulation. (ECF No. 23, at 9-11.) It also argues that the state law claims should be dismissed on the same ground, namely, no antitrust violation and therefore no wrongful conduct providing the necessary basis for the state law claims. (Id. at 12-13.) Defendant submitted an affidavit and four exhibits with its Motion to Dismiss. Plaintiff moves to strike those exhibits on the ground that they are not properly considered on a defendant's Rule 12(b)(6) motion to dismiss a complaint. (ECF No. 27.)
Before turning to Defendant's Motion to Dismiss, the Court first addresses Plaintiff's Motion to Strike in order to clarify what documentation, if any, the Court will consider on Defendant's Motion to Dismiss. In support of its Motion to Dismiss, Defendant filed an affidavit of S. Jenny Van, a law clerk at the law firm representing Defendant, and attached four exhibits to the affidavit. The exhibits are allegedly documents evidencing various agreements between CECFA, Defendant, and/or UCD. Plaintiff moves to strike the four exhibits.
"Typically, a motion to dismiss under Fed.R.Civ.P. 12(b)(6) concerns only the adequacy of the allegations in the complaint." Straily v. UBS Fin. Servs., Inc., No. 07-cv-00884, 2008 WL 793615, at *2 (D.Colo. Mar. 24, 2008). However,
GFF Corp. v. Associated Wholesale Grocers, Inc., 130 F.3d 1381, 1384 (10th Cir. 1997). Even as to such documents, however, the Court has discretion whether or not to consider them on a Rule 12(b)(6) motion to dismiss. See Prager v. LaFaver, 180 F.3d 1185, 1189 (10th Cir.1999) ("GFF Corp. did not purport to decide whether consideration of materials appended to a motion to dismiss is mandatory or discretionary.... We agree with our sister circuits that ... the court has discretion to consider such materials.").
The Court declines to consider the exhibits attached to Defendant's Motion to Dismiss for two reasons. First, the Court cannot conclude that these are indisputably authentic copies of the documents purportedly being submitted by Defendant. "The requirement of authentication... is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims." Fed. R.Evid. 901(a). One such way to authenticate a document is to provide "[t]estimony [of a witness with knowledge] that a matter is what it is claimed to be." Fed. R.Evid. 901(b)(1). Here, the documents are attached to an affidavit filed by a law clerk of the law firm representing Defendant. The law clerk, S. Jenny Van, only declares that she "reviewed documents associated with the 2008 Campus Village Apartments bond offering by the [CECFA]," and on that basis certifies that the documents are true and correct copies of what she purports them to be. The mere fact that Ms. Van "reviewed documents" she believes were "associated with the 2008 Campus Village Apartments bond offering" does not sufficiently authenticate those documents. A much surer way to authenticate the documents would have been to submit an affidavit from one of the signatories to the agreements (such as Defendant's employee (or former employee) David E. Chadwick).
Further, even if the documents had been properly authenticated, the Court would have declined to exercise its discretion to consider the documents. As Plaintiff points out, Defendant has only selected certain documents referenced in the Amended Complaint to submit to the Court. The Court declines to consider this select universe of documents at the motion to dismiss stage, and for the same reason declines to convert Defendant's Motion to a motion for summary judgment. See Straily, 2008 WL 793615, at *3.
Plaintiff's Motion to Strike Exhibits A-D to Defendant's Motion to Dismiss is therefore GRANTED. The Court now turns to addresses the merits of Defendant's Motion to Dismiss.
Under Federal Rule of Civil Procedure 12(b)(6), a defendant may move to dismiss a complaint for "failure to state a claim upon which relief can be granted." In evaluating such a motion, a court must
Defendant argues that the Sherman Act claim is subject to dismissal because Defendant is shielded from liability by the state action immunity doctrine. Specifically, it argues that
(ECF No. 23, at 9-10.)
"The state action immunity doctrine... exempts qualifying state and local government regulation from federal antitrust, even if the regulation at issue compels an otherwise clear violation of the federal antitrust laws." Zimomra v. Alamo Rent-A-Car, Inc., 111 F.3d 1495, 1498 (10th Cir.1997) (citations and quotation marks omitted). "Although the doctrine was [originally] aimed at protecting state legislatures and state supreme courts acting in their legislative capacities, it can provide protection to other individuals or entities acting pursuant to state authorization. In such situations, however, closer analysis is required to determine whether antitrust immunity is appropriate." Id. (citations and quotation marks omitted).
As an initial matter, there is a question as to what legal test applies to this case. Plaintiff argues that the test from California Retail Liquor Dealers Association v. Midcal Aluminum, 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980) ("Midcal test") applies, in which the Supreme Court established a two-part test to determine whether alleged anticompetitive conduct by a private party is immunized under the state action immunity doctrine. The two requirements under that test are: (1) "the challenged restraint must be one clearly articulated and affirmatively expressed as state policy," and (2) "the policy must be actively supervised by the State itself." Id. at 105, 100 S.Ct. 937 (quotation marks omitted).
Defendant, meanwhile, argues that the test from Town of Hallie v. City of Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985) ("Town of Hallie test") applies, in which the Supreme Court modified
The Tenth Circuit in Zimomra v. Alamo Rent-A-Car held that the Town of Hallie test applied to a case in which defendants — private car rental companies — were sued for antitrust violations arising from their imposition of a daily usage fee set by a City and County of Denver ordinance. 111 F.3d at 1498-1501. The Court held that the Town of Hallie test applied, and not the Midcal test, because the private car rental companies had no discretion in imposing the fee or in setting the amount of the fee, both of which were dictated by the County ordinance. See id. The court pointed out that the plaintiff could have named the City and County of Denver as a defendant (or even as the sole defendant) in the action, and had he done so, the single-pronged Town of Hallie test clearly would have applied. Id. at 1500.
This case is sufficiently comparable to Zimomra such that the Court finds it most appropriate to apply the Town of Hallie test to the instant action. The anticompetitive conduct complained of in this action is the Agreement between Defendant and UCD. If Plaintiff had sued both Defendant and UCD, or UCD alone, the Town of Hallie test would clearly apply. Just because Plaintiff has chosen to sue only Defendant, a private party, does not alter the legal test this Court should apply in evaluating the Agreement. Plaintiff argues that the "active supervision" prong of the Midcal test should apply because, unlike in Zimomra, Defendant here maintained some discretion in carrying out the Agreement, specifically, by controlling the terms, including rental rates, for the lease agreement with UCD students. However, as Defendant argues, the rental rates Defendant charged are merely the allegedly anticompetitive effects of the conduct that forms the basis for this action. The allegedly anticompetitive conduct in this action is the Agreement between UCD and Defendant creating the residency restriction. The allegations in the Amended Complaint indicate that UCD enforced the residency restriction (ECF No. 19, ¶¶ 22-23, 37-39, 42), with little or no "discretion" left in Defendant regarding enforcement of the Agreement.
The Court's analysis turns to the Town of Hallie test (and the first prong of the Midcal test), namely, whether the challenged restraint — the Agreement between Defendant and UCD creating the residency restriction — was one clearly articulated and affirmatively expressed as state policy. The Tenth Circuit's most recent decision applying the Town of Hallie test came earlier this year in Kay Electric Cooperative v. The City of Newkirk, Oklahoma, 647 F.3d 1039 (10th Cir. 2011). There, the court grappled with the question of "[h]ow clearly must a state legislature articulate its authorization of anticompetitive ... conduct to trigger antitrust
The Court proceeds to evaluate the state legislation from which Defendant argues that Agreement was foreseeable. Title 23, Article 15 of the Colorado Revised Statutes, entitled the Colorado Educational and Cultural Facilities Authority Act ("the Act"), governs the CECFA's operations. Section 102 of the Act provides,
Colo.Rev.Stat. § 23-15-102(1)(a). Section 107 of the Act lays out the general powers of the CECFA. Defendant argues that three provisions of this Section — provisions (1)(f), (1)(h), and (1)(i) — are the ones evidencing the Colorado legislature's authorization of the conduct complained of in this action. Those provisions provide:
Colo.Rev.Stat. § 23-15-107(1) (emphasis added). Defendant argues that it is "a participating educational institution" under the statute, "designate[d]" as an "agent" of the CECFA to "enter into any contracts for any and all of such purposes including contracts for the management and operation" of the Campus Village Apartments and to "establish ... rules and regulations" governing the use of the Campus Village Apartments.
Kay Electric is instructive as to this argument. There, the Court stated,
Kay Electric, 647 F.3d at 1043. As a result, the Court rejected the defendant's argument that it was entitled to immunity for anticompetitive conduct based on certain "general enabling statutes conferring on [the defendant] the authority to do business." Id. at 1044.
The broad and general legislative authorization discussed in this passage from Kay Electric — "the authority to make contracts, to buy and sell property, to enter into joint ventures" — is just the type of broad and general legislative authority provided to CECFA by the Colorado legislature via Colorado Revised Statute § 23-15-107(1). The authority granted to CECFA here, including, inter alia, the authority "to enter into contracts for any and all of such purposes" and "to establish such rules and regulations for the use of the facilities undertaken or operated by such participating institution," does not indicate a sufficiently clear articulation of a policy to displace competition. There is insufficient indication (at least at this early stage of the proceeding) that the Agreement between Defendant and UCD was sufficiently foreseeable based on the Colorado legislature's grant of these broad and general powers to CECFA.
The cases relied on by Defendant are to be distinguished. As discussed above, Zimomra involved a challenge to a fee charged by private rental car companies at Denver International Airport, a fee that was required to be charged, and the amount of which was set, by a City and County of Denver ordinance. Another case relied on by Defendant — Allright Colorado, Inc. v. City & County of Denver, 937 F.2d 1502 (10th Cir.1991) — involved the City and County of Denver's operation of a shuttle bus service at Stapleton International Airport and its policies, including the imposition of fees, negatively impacting
Colo.Rev.Stat. § 41-4-106; Zimomra, 111 F.3d at 1501-03 (citing statute and emphasizing the importance of its explicit authorization "to exact and require charges, fee, and tolls"); Allright Colorado, 937 F.2d at 1508-09 (citing statute and emphasizing the importance of its explicit authorization "to regulate the receipt, deposit, and removal and the embarkation of passengers or property to or from such airports" and "to exact and require charges, fees, and tolls").
Here, however, we do not have such a specific statute evidencing, for example, a state policy authorizing CECFA loan recipients to enter into exclusive agreements to better ensure that the loan provided by the CECFA is repaid. Instead, we only have very general, and neutral, authorizations to "enter into contracts" and "establish rules and regulations." As Kay Electric explains, the broad and general authorizations applicable in this case do not clearly articulate and affirmatively express a state policy to displace competition.
Although Defendant does not so argue (see ECF No. 23, at 9-11; ECF No. 32, at 4-7), the more seemingly direct inquiry would be whether the Colorado legislature has authorized public universities, such as UCD, to enter into agreements creating such residency restrictions. Defendant does take the time in its Motion to Dismiss to provide background as to "[t]he University of Colorado and its [p]owers." (ECF No. 23, at 6-7.) However, the statutes cited by Defendant regarding the legislature's authorization of power to UCD provide that UCD is "an urban comprehensive undergraduate and graduate research university" (Colo.Rev.Stat. § 23-20-101(1)(b)) and that the University of Colorado's Board of Regents has "general supervision of the university" (Colo.Rev.Stat. § 23-20-111). These statutes certainly do not evince a legislative authorization for UCD to enter into an agreement creating a residency requirement for certain students to live at a privately-owned apartment complex not physically on the UCD campus. While such a decision by UCD is not necessarily anticompetitive or otherwise wrongful, the question before the Court is whether Defendant is entitled to immunity from antitrust liability based on the state action immunity doctrine. The Court holds, at least at this stage of the proceedings, that it is not.
As Defendant appears to concede in its Motion and Reply (ECF No. 23, at 12-13;
Based on the foregoing, the Court hereby ORDERS as follows:
