Auraria Student Housing at the Regency, LLC v. Campus Village Apartments, LLC

Filing 170

ORDER denying 137 Defendants Motion for Summary Judgment in its entirety, by Judge William J. Martinez on 9/8/2014.(evana, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 10-cv-02516-WJM-KLM
AURARIA STUDENT HOUSING AT THE REGENCY, LLC, a Colorado limited liability
company,
Plaintiff,
v.
CAMPUS VILLAGE APARTMENTS, LLC, a Delaware limited liability company,
Defendant.

ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT

Plaintiff Auraria Student Housing at the Regency, LLC (“Plaintiff”) brings this
action against Campus Village Apartments, LLC (“Defendant”). Before this Court is
Defendant’s Motion for Summary Judgment under Federal Rule of Civil Procedure
56(a) (“Motion”). (ECF No. 137.) For the reasons set forth below, Defendant’s Motion
is denied.
I. BACKGROUND
The relevant facts, in the light most favorable to Plaintiff, the nonmovant, are as
follows.
Plaintiff leases and operates an apartment complex in Denver under the trade
name The Regency - Auraria’s Student Housing Community, LLC (the “Regency”).
(ECF No. 72-4 ¶ 3.) The Regency is dedicated to providing off-campus housing for
students attending classes on the campus of the Auraria Higher Education Center
campus (“Auraria Campus”) in Denver. (Id. ¶ 4.) The Regency is located a few miles

away from the Auraria Campus. (ECF Nos. 75 p. 6; 75-9.)
Defendant is a limited liability company whose sole member is the University of
Colorado Real Estate Foundation (“CUREF”). (ECF No. 72-2 ¶ 2.) Defendant owns the
Campus Village Apartments, another apartment complex dedicated to providing offcampus housing for students at the Auraria Campus. (Id. ¶¶ 2, 21.) Campus Village
Apartments is located on land adjacent to the Auraria Cam pus. (ECF No. 72-21 p. 12.)
In response to a 2004 study that found that the Auraria Campus had a housing
demand (ECF No. 72-5 p. 3), the University of Colorado Denver (“UCD”) approached
CUREF to construct student housing on land adjacent to campus. (Def. Br. (ECF No.
138) p. 7.) CUREF formed Defendant in order to construct the Campus Village
Apartments. (ECF No. 72-21 p. 12.)
The Campus Village Apartments opened in time for the fall 2006 semester at
UCD. (Def. Br. p. 13.) In order to minimize Defendant’s risks associated with the new
housing, UCD instituted a live-in requirement, whereby most full-time domestic
freshmen and international students were required, during their first two semesters of
enrollment at UCD, to reside at the Campus Village Apartments (the “Residency
Requirement”). (ECF Nos. 72-11; 72-21 p. 12.)
In May 2008, UCD, CUREF, and Defendant entered into an operating agreement
regarding the Campus Village Apartments (the “2008 Agreement”). (ECF Nos. 72-20;
72-21 p. 5.) Pursuant to the 2008 Agreement, UCD agreed to continue enforcing the
Residency Requirement. (ECF No. 72-20 ¶ 2.1.) In return, Defendant gave UCD
students placement priority at the Campus Village Apartments with a specific number of
beds dedicated each year for UCD students. (Id. ¶ 2.3.)
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Plaintiff alleges that from August 2006 through July 2014, the Regency lost
$3,420,000 due to this, and other, agreements between Defendant and UCD. (ECF
No. 150-34 pp. R 00913, R 00920.)
On these facts, Plaintiff filed this action against Defendant on October 14, 2010.
(ECF No. 1.) On February 7, 2011, Plaintiff filed an Amended Complaint alleging 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. (ECF No. 19 ¶¶ 7088.)
On May 3, 2013, Plaintiff filed a Motion for Partial Summary Judgment on its first
claim (conspiracy to monopolize) pursuant to Federal Rule of Civil Procedure 56. (ECF
No. 71.) On January 22, 2014, the Court denied Plaintiff’s Motion for Partial Summary
Judgment, finding that questions of fact existed as to whether Defendant intended to
exclude competition and control prices in the student housing market. (ECF No. 136 at
6, 7.)
On January 30, 2014, Defendant filed the instant Motion seeking summary
judgment on all of Plaintiff’s claims. (ECF No. 137.) On March 17, 2014, Plaintiff filed
its Opposition to Defendant’s Motion (ECF No. 150), and Defendant filed its Reply on
April 3, 2014 (ECF No. 156). On August 21, 2014, Plaintiff filed an Unopposed Motion
for Leave to Cite Supplemental Authority Relevant on Defendant’s Motion for Summary
Judgment (ECF No. 168), which was granted by the Court on August 21, 2014 (ECF
No. 169).
This Motion is now ripe for resolution.
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II. STANDARD OF REVIEW
Summary judgment is appropriate only if there is no genuine issue of material
fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.
56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Henderson v. Inter-Chem
Coal Co., Inc., 41 F.3d 567, 569 (10th Cir. 1994). W hether there is a genuine dispute
as to a material fact depends upon whether the evidence presents a sufficient
disagreement to require submission to a jury or conversely, is so one-sided that one
party must prevail as a matter of law. Anderson v. Liberty Lobby, 477 U.S. 242, 248-49
(1986); Stone v. Autoliv ASP, Inc., 210 F.3d 1132 (10th Cir. 2000); Carey v. U.S. Postal
Serv., 812 F.2d 621, 623 (10th Cir. 1987).
A fact is “material” if it pertains to an element of a claim or defense; a factual
dispute is “genuine” if the evidence is so contradictory that if the matter went to trial, a
reasonable party could return a verdict for either party. Anderson, 477 U.S. at 248.
The Court must resolve factual ambiguities against the moving party, thus favoring the
right to a trial. Houston v. Nat’l Gen. Ins. Co., 817 F.2d 83, 85 (10th Cir. 1987).
III. ANALYSIS
Plaintiff alleges four causes of action: (1) conspiracy to monopolize, in violation
of Section 2 of the Sherman Act, 15 U.S.C. § 2 (the “Section 2 Claim”); (2) interference
with prospective business relations; (3) interference with existing contractual relations;
and (4) civil conspiracy. (ECF No. 19 ¶¶ 70-88.) Defendant moves for summary
judgment on all of Plaintiff’s claims. (Def. Br. at 2-3.)

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A.

Section 2 Claim
Section 2 of the Sherman Act prohibits conspiracy to monopolize any part of

interstate trade or commerce. 15 U.S.C. § 2. To succeed on a claim of conspiracy to
monopolize, a plaintiff must establish: “(1) the existence of a combination or conspiracy
to monopolize; (2) overt acts done in furtherance of the combination or conspiracy; (3)
an effect upon an appreciable amount of interstate commerce; and (4) a specific intent
to monopolize.” TV Commc’ns Network, Inc. v. Turner Network Television, Inc., 964
F.2d 1022, 1026 (10th Cir. 1992) (internal citation om itted).
Defendant argues that the Section 2 Claim should be dismissed because: (1)
Plaintiff cannot show harm to competition because Plaintiff’s agreement with UCD was
a lawful tying arrangement; (2) there was no agreement between Defendant and UCD
to create a monopoly; (3) neither UCD nor Campus Village had the specific intent to
create a monopoly; and (4) both UCD and Campus Village acted for legitimate
educational and business reasons. (Def. Br. at 19.) The Court will address each of
Defendant’s arguments in turn.
1.

Section 1 Tying Arrangement

Defendant first argues that its agreement with UCD is a lawful tying arrangement
that does not harm the competitive process under 15 U.S.C. § 1 and, as such, Plaintif f
cannot succeed on its Section 2 Claim. (Def. Br. at 19-21 (citing NYNEX Corp. v.
Discon, Inc., 525 U.S. 128, 139 (1998) (explaining that a plaintiff who cannot show that
an agreement harms the competitive process under Section 1 of the Sherman Act
cannot succeed on a Section 2 conspiracy to monopolize claim); Gregory v. Fort

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Bridger Rendezvous Ass’n, 448 F.3d 1195, 1206 (10th Cir. 2006) (“Becau se the
Gregorys fail to establish that the FBRA’s challenged conduct harmed the competitive
process under § 1, their conspiracy to monopolize claim under § 2 likewise fails.”).)
Plaintiff, however, argues that the agreement between Defendant and UCD is not a
tying arrangement, and accordingly, that Defendant’s affirmative defense is not relevant
to its Section 2 Claim. (Pl. Br. (ECF No. 150) at 36-38; ECF No. 150-10 p. 6.)
“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.” Eastman
Kodak v. Image Technical Servs., Inc., 504 U.S. 451, 461 (1992) (internal citation and
quotation mark omitted). “A tie-in constitutes a per se Section 1 violation if the seller
has appreciable economic power in the tying product market and if the arrangement
affects a substantial volume of commerce in the tied product market.” Multistate Legal
Studies, Inc. v. Harcourt Brace Jovanovich Legal & Prof’l Publ’ns, Inc., 63 F.3d 1540,
1546 (10th Cir. 1995). The elements of a per se unlawful tying arrangement, therefore,
are: (1) two separate products; (2) a tie or conditioning of the sale of one product on the
purchase of another; (3) sufficient economic power in the tying product market; and (4)
a substantial volume of commerce affected in the tied product market. Id. at 1546-47.
Evaluation of the relevant market requires evidence of both a product market and
geographic market. Lantec, Inc. v. Novell, Inc., 306 F.3d 1003, 1024 (10th Cir. 2002).
Thus, without this market evidence, a tying arrangement is not unlawful under 15
U.S.C. § 1.

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As the movant, Defendant “must submit evidence to establish every essential
element of its claim or affirmative defense.” Carpenter v. Allstate Ins. Co., 2008 WL
554757, at *1 (D. Colo. Feb. 28, 2008). Here, however, Defendant has not introduced
evidence defining the relevant market.1 As such, the Court cannot determine whether
the agreement between Defendant and UCD is a lawful tying arrangement.
Furthermore, the absence of this evidence prevents the Court from determining, as a
matter of law, whether UCD has appreciable economic power, and thus, whether
Defendant’s agreement with UCD harms the competitive process for purposes of
Plaintiff’s Section 2 Claim.2 See Gregory, 448 F.3d at 1206. Accordingly, the Court
finds that Defendant has failed to meet its burden.
Defendant cites authority holding that similar mandatory housing requirements
were upheld where the defendant university owned the housing facility. (ECF No. 156
at 13-14.) Although Defendant’s argument is compelling, Defendant has not offered

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Defendant merely argues Plaintiff “has no evidence that UCD, as the ‘seller’ of the
tying product (higher education) has market power or operates in a non-competitive market.”
(Def. Br. at 21) (noting that UCD’s has a 1.88% market share of first-time college students in
Colorado).) Plaintiff also has not introduced evidence defining the relevant market, arguing
instead that since Defendant’s agreement with UCD is not a tying arrangement, whether or not
UCD has market power is irrelevant to Plaintiff’s Section 2 Claim. (Pl. Br. at 36 (citing See
Salco Corp. v. Gen. Motors Corp., 517 F.2d 567, 576 (10th Cir. 1975) (“Specific intent to
monopolize is the heart of a conspiracy [to monopolize] charge [under 15 U.S.C. § 2], and a
plaintiff is not required to prove what is the ‘relevant market.’”).)
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The Court also notes that additional questions of fact exist as to whether a substantial
amount of commerce in the tied product (Campus Village Housing) is involved. See Multistate
Legal Studies., 63 F.3d at 1546. This is evaluated in terms of dollar volume, not market
percentage. In re Cox Enters., Inc. Set-Top Cable Television Box Antitrust Litig., 2014 WL
104964, at *11 (W.D. Okla. Jan. 9, 2014); see also (ECF No. 150-34 pp. R 00913, R 00920
(alleging that from August 2006 through July 2014, the Regency lost $3,420,000 due to the
agreement between Defendant and UCD)); (ECF No. 133 at 7) (disputing this calculation).

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any authority extending a lawful tying arrangement to the situation here, where a
university requires its students to live in housing owned not by the university itself, but
by a private third-party. Cf. Hack v. President & Fellows of Yale Coll., 237 F.3d 81, 8687 (2d Cir. 2000) (finding that Yale College’s policy requiring students to live in coeducational residence halls was not an illegal tying arrangement); Delta Kappa Epsilon
(DKE) Alumni Corp. v. Colgate Univ., 492 F. Supp. 2d 106, 117 (N.D.N.Y. 2007)
(finding policy requiring students live in University-owned housing was not a
monopolistic tying arrangement); Hamilton Chapter of Alpha Delta Phi, Inc. v. Hamilton
Coll., 106 F.Supp.2d 406, 413 (N.D.N.Y.2000) (rejecting monopolization challenge to
college’s required housing and meal programs).
Accordingly, Defendant is not entitled to summary judgment based on its
affirmative defense of a lawful tying arrangement.
2.

Section 2 Conspiracy to Monopolize

Defendant next argues that summary judgment is appropriate because: (1) there
was no agreement between Defendant and UCD to create a monopoly; (2) neither UCD
nor Campus Village had the specific intent to create a monopoly; and (3) both UCD and
Campus Village acted for legitimate educational and business reasons. (Def. Br. at 19.)
In the Court’s January 22, 2014 Order denying Plaintiff’s Motion for Partial
Summary Judgment (ECF No. 136), the Court found that questions of fact existed as to
Plaintiff’s Section 2 Claim (Id. at 7-8), thus precluding the granting of Plaintiff’s motion.
The Court herein adopts and incorporates its findings and conclusions from said Order.
Specifically, the Court found that “questions of fact exist as to whether Defendant and

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UCD intended to exclude competition in the student housing market” and “as to whether
Defendant controlled prices in the student housing market.” (Id. at 7.) Defendant has
not submitted any evidence resolving the questions of fact regarding its intent to
exclude competition. (See Def. Br. at 25-26.) Additionally, although Defendant
submitted evidence explaining that it considered housing rates charged by other local
universities before setting the rental rates at Campus Village Apartments (ECF No. 1386 pp. 197:10-13, 198:5-21), it did not subm it evidence showing that these rates were
competitive with those universities. The Court, therefore, finds that these questions of
material fact still exist.
Accordingly, Defendant is not entitled to summary judgment on Plaintiff’s Section
2 Claim.
B.

State Law Claims
Defendant also moves for summary judgment on Plaintiff’s state law claims for

interference with prospective business relations, interference with existing contractual
relations, and civil conspiracy. (Def. Br. at 29-33.)
1.

Tortious Interference With Contractual and Prospective Business
Relations

Plaintiff alleges that Defendant, through its violation of the Sherman Act,
tortiously interfered with its existing contractual relations and prospective business
relations. (ECF No. 19 ¶¶ 80-88.) To establish a claim for tortious interference with
contractual relations, Plaintiff must show that: (1) it had a contract with a third party; (2)
defendant knew of the contract’s existence; (3) defendant intentionally induced the third
party to breach the existing contract; (4) defendant acted improperly; and (5)
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defendant’s actions caused plaintiff to incur damages. Campfield v. State Farm Mut.
Auto. Ins. Co., 532 F.3d 1111, 1122 (10th Cir. 2008). “T ortious interference with
prospective business relations requires identical elements, with the exception that an
existing contract need not be alleged. Rather, [Plaintiff] must show that there was a
reasonable likelihood that a contract would have resulted but for the wrongful
interference.” Id.
Defendant argues that Plaintiff cannot show that Defendant acted improperly
with its prospective or current business relations. (Def. Br. at 30.) Plaintiff, however,
argues that Defendant used the improper means of conspiracy to monopolize, an
antitrust violation, to interfere with Plaintiff’s prospective business or existing contractual
relations with tenants. (Pl. Br. at 38.) W hether Defendant’s conduct was improper
depends largely on Plaintiff’s success in proving its Section 2 Claim at trial. See
Nobody in Particular Presents, Inc. v. Clear Channel Commc’ns, Inc., 311 F. Supp. 2d
1048, 1119 (D. Colo. 2004). Plaintiff’s allegations of improper conduct, therefore,
survive summary judgment on its tortious interference claims. See id. (denying
summary judgment on tortious interference with prospective relations claim where the
defendant’s conduct, if proven at trial to be an illegal tying agreement, would have been
improper).
2.

Civil Conspiracy

To establish a claim for civil conspiracy, a plaintiff must show by a
preponderance of the evidence that there exists: (1) an object to be accomplished; (2)
an agreement by two or more persons on a course of action to accomplish that object;

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(3) in furtherance of that course of action, one or more unlawful acts which were
performed to accomplish a lawful or unlawful goal, or one or more lawful acts which
were performed to accomplish an unlawful goal; and (4) damages to the plaintiff as a
proximate result. Double Oak Constr. v. Cornerstone Dev. Int’l, 97 P.3d 140, 146 (Colo.
Ct. App. 2003). “In a civil action, conspiracy is a derivative cause of action that is not
actionable per se.” Id. “[T]he essence of a civil conspiracy claim is not the conspiracy
itself, but the actual damages resulting from the acts done in furtherance of the
conspiracy.” Resolution Trust Corp. v. Heiserman, 898 P.2d 1049, 1055 (Colo. 1995).
“If the acts alleged to constitute the underlying wrong provide no cause of action, then
there is no cause of action for the conspiracy itself.” Double Oak, 97 P.3d at 146.
“[T]he required proof for a conspiracy under Colorado common law is essentially
the same as the proof required for a conspiracy under § 1 of the Sherman Act.” Four
Corners Nephrology Assocs., P.C. v. Mercy Med. Ctr. of Durango, 2008 WL 622815, at
*16 (D. Colo. Mar. 4, 2008) aff’d, 582 F.3d 1216 (10th Cir. 2009). The Court has
already determined that questions of fact exist as to whether Defendant’s agreement
with UCD is a permissible tying arrangement under 15 U.S.C. § 1. Accordingly, for the
same reasons Defendant is not entitled to summary judgment on its tying arrangement
defense, Defendant is also not entitled to summary judgment on Plaintiff’s common law
civil conspiracy claim. See id.
IV. CONCLUSION
For the foregoing reasons, Defendant’s Motion for Summary Judgment (ECF
No. 137) is DENIED in its entirety.

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Dated this 8th day of September, 2014.
BY THE COURT:

__________________________
William J. Martínez
United States District Judge

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