INSERRA SUPERMARKETS, INC. v. THE STOP & SHOP SUPERMARKET COMPANY, INC. et al

Filing 55

OPINION. Signed by Judge William J. Martini on 7/27/17. (gh, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Docket No.: 16-cv-01697

INSERRA SUPERMARKETS, INC.,
Plaintiff,
v.

OPINION

THE STOP & SHOP SUPERMARKET CO.,
LLC, ABC CORPORATIONS 1-10, AND
JOHN DOES 1-10
Defendants.

WILLIAM J. MARTINI, U.S.D.J.:
Plaintiff Inserra Supermarkets, Inc. (“Inserra”) brings eight federal and state
antitrust and tort claims against The Stop & Shop (“S&S” or “Defendant”). The Complaint
alleges that Defendant filed “sham” administrative objections and lawsuits in order to
prevent Inserra from opening a Shop-Rite supermarket in the town of Wyckoff, New
Jersey. On February 28, 2017, the Court denied Defendant’s motion to dismiss. Defendant
now moves the Court under Federal Rule of Civil Procedure 28 U.S.C. §1291(b) to certify
the Order for interlocutory appellate review and stay proceedings pending appeal. For the
reasons below, the motion is DENIED.
I.

BACKGROUND

A. Defendant’s Alleged Pattern of Sham Petitioning at State Level
In 2009, Inserra leased 7.4 acres of land (“the Property”) in Wyckoff, New Jersey,
intending to open a full-service Shop-Rite supermarket.1 First Amended Complaint
(“FAC.”) ¶¶ 40, 45. The Property is located adjacent to Defendant Shop & Stop, which
Inserra alleges is the only full-service supermarket in Wyckoff. Id. at ¶ 243. Inserra applied
for land-use approval with the Wyckoff Planning Board in September 2009, and later with
the Bergen County Planning Board in June 2011. Id at ¶ 65.
Defendant allegedly abused the approval process by filing dozens of “obstructionist,
anti-competitive [objections],” resulting in “39 hearings over nearly three years.” Id. at ¶¶
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The Court’s February 28, 2017, Opinion contains a more detailed review of the allegations.
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79, 214.2 Inserra alleges that Defendant acted in concert with Munico, LLC, landlord of
Defendant’s Wyckoff property and Defendant’s collaborator on other existing and
prospective projects. Id. at ¶ 71.3 The Wyckoff Board finally approved Inserra’s application
on February 13, 2013, and the County Board’s approval followed on April 8, 2014. Id. at
¶ 113. Defendant appealed the County’s decision to Board of Chosen Freeholders
(“Freeholders”), which affirmed the approval after de novo review in August 2014.
As administrative proceedings dragged on, Defendant Shop & Stop and Munico
initiated judicial proceedings against Inserra in state court. On April 1, 2013, Defendant
and Munico filed separate complaints in New Jersey Superior Court challenging the
Wyckoff Board’s approval of Inserra’s application. FAC ¶ 131.4 Defendant filed a similar
action challenging the County Board’s approval in October 2014. Additionally, in August
2014, Defendant sued Bergan County under New Jersey’s Open Public Records Act
(“OPRA”), alleging that documents regarding Inserra’s application had been withheld
improperly. Id. at ¶ 158. All state actions have been decided in favor of Inserra or
withdrawn.5
B. Procedural History Before This Court
Inserra filed this action on March 28, 2016, alleging that Defendant executed a
“corporate policy of filing anticompetitive sham petitions . . . [which were] more interested
in delay[ing] than in redressing any particular grievances.” FAC ¶ 16. Count I alleges that
Defendant conspired with Munico to restrain trade in violation of Section 1 of the Sherman
Act. 15 U.S.C. § 1. Count II alleges that Defendant violated Section 2 of the Sherman Act,
15 U.S.C. § 2, by monopolizing or attempting to monopolize the market for full-service
supermarkets in the Greater Wyckoff Area. FAC ¶ 259. Counts III and IV state claims
under corresponding provisions of the New Jersey Antitrust Act. N.J.S.A. 56:9-3; 56:9-4.
By comparison, Plaintiff notes that proceedings for Defendant’s land-use application on an
adjacent plot required only two hearings. FAC ¶ 64.
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Munico was initially a defendant in this action. On May 6, 2016, Inserra and Munico entered a
stipulation of dismissal with prejudice, as the matter had been resolved out of court. ECF No. 6.
Both actions were filed as “complaints in lieu of prerogative writs,” New Jersey’s procedural
mechanism for challenging governmental or quasi-governmental decision. See N.J.S.A. Const.
Art. 6, § 5, ¶ 4; Willoughby v. Planning Bd. Of Tp. Of Deptford, 703 A.2d 668, 671 (N.J. App.
Div. 1997).
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On August 18, 2016, the Appellate Division affirmed the decision upholding the Wyckoff
Board’s grant of approval, and Munico withdrew its analogous appeal. A state appeals court
affirmed the denial of Defendant’s OPRA request on account that Defendant “already obtained
the records before it filed its declaratory judgment action,” rendering it moot. Stop & Shop
Supermarket Co., LLC. v. County of Bergen, et al., Docket Nos. A-2134-14T1, A-4630-14T1
(N.J. Sup. Ct. App. Div., June 14, 2017).
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Counts V-VIII allege tortious interference by contract, interference with prospective
economic advantage, civil conspiracy, and malicious use of process.
On February 28, 2017, the Court denied Defendant’s motion to dismiss the FAC for
failure to state a claim. ECF No. 36. On March 24, 2017, Defendant moved to certify the
order for immediate appellate appeal under 28 U.S.C. § 1292(b). The Court subsequently
adjourned the motion date to May 15, 2017 in response to a joint request by the parties.
Letter from Arthur N. Chagaris, ECF No. 48. A Declaration of John J. Lamb, attorney for
Inserra, has informed the Court that all state cases have been resolved on appeal in favor
of Inserra. ECF No. 51.
II.

LEGAL STANDARD

District courts have discretion to certify an interlocutory order for immediate appeal.
28 U.S.C. § 1292(b). See In re Cendant Corp. Secs. Litig., 166 F. Supp. 2d 1, 13 (D.N.J.
2001). Because immediate appeal marks a “deviation from the ordinary policy of avoiding
‘piecemeal appellate review of trial court decisions,’” certification is “used sparingly.”
Kapossy v. McGraw-Hill, Inc., 942 F. Supp. 996, 1001 (D.N.J. 1996) (citations omitted).
The Court considers three criteria:6 “[t]he order must (1) involve a ‘controlling question of
law,’ (2) offer ‘substantial ground for difference of opinion’ as to its correctness, and (3) if
appealed immediately ‘materially advance the ultimate termination of the litigation.’” Katz
v. Carte Blanche Corp., 496 F.2d 747, 754 (3d Cir. 1974) (quoting 28 U.S.C. § 1292(b)).
The purpose of § 1292(b) is “to permit decision of legal issues as to which there is
considerable question without requiring the parties first to participate in a trial that may be
unnecessary.” Meyers v. Heffernan, 2014 WL 7336792, at *3 (D.N.J. Dec. 22, 2014).
Accordingly, “saving of time of the district court and of expense to the litigants” bears
significantly on a court’s decision to grant certification under § 1292(b). Katz, 496 F.2d at
755.
III.

DISCUSSION

Defendant seeks immediate appellate review of two issues: first, whether the
“continuing violation” exception to the four-year limitations provision applies to a series
of “sham petitions” that began prior to the limitations period but extended into the
limitations period; and second, whether the Defendant’s petitions before local
administrative agencies and administrative tribunals constitute a “series” of petitions such
that Defendants are not entitled to First Amendment protections under Noerr-Pennington.
Neither issue is appropriate for review under § 1292.
A. “Continuing violation” Exception to the Statute of Limitations
“[E]ven if all three criteria under Section 1292(b) are met, the district court may still deny
certification, as the decision is entirely within the district court's discretion.” Wyndham, 10 F.
Supp. 3d 601, 633 (D.N.J. 2014) (citations omitted).
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Defendant seeks review of “whether the ‘continuing violation’ exception to the
statute of limitations can apply to save in its entirety an antitrust claim based on ‘sham
petitioning’ where a substantial portion of the alleged petition occurred outside the fouryear limitations period.” Defs. Br. 8. This is a “controlling question of law,” because if the
exception does not apply then Plaintiff’s antitrust claims would be barred in whole or in
part by the four-year statute of limitations under 15 U.S.C. § 15b.
Although the Third Circuit has not specifically applied the continuing violation
doctrine to sham petitioning, there is “no substantial . . . genuine doubt or conflicting
precedent as to the correct legal standard.” Kapossy, 942 F. Supp. At 1001. “In the context
of a continuing conspiracy to violate the antitrust laws . . . each time a plaintiff is injured
by an act of the defendants a cause of action accrues to [it] to recover the damages caused
by that act and . . . as to those damages, the statute of limitations runs from the commission
of the act.” Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321 (1971)).
Defendants make no coherent argument as to why the continuing violation exception
should not apply to antitrust claims predicated on sham petitioning. “[F]irst impression,
standing alone, is insufficient to demonstrate a substantial ground for difference of
opinion.” In re Flor, 79 F.2d 281, 284 (2d Cir. 1996); Max Daetwyler Corp. v. Meyer 575
F. Supp. 280, 284 (E.D. Pa. 1983). It “should not be granted merely because a party
disagrees with the rulings of the district judge, but instead there must be genuine doubt
about the correct legal standard.” Shevlin v. Phoenix Life Ins. Co., 2015 WL 348552, at *5
(D.N.J. Jan. 23, 2015) (quotations omitted). Review of this issue will not “materially
advance the ultimate termination of the litigation.” 28 U.S.C. § 1292(b).
B. Application of Noerr-Pennington Immunity
Defendant argues that the Court applied the incorrect standard to determine whether
the petitioning conduct was protected by the First Amendment pursuant to the NoerrPennington doctrine. As discussed in the Court’s prior opinion, there are two separate
applications of Noerr-Pennington, depending on whether the alleged sham is a single
petition or a “series” of petitions. Hanover 3201 Realty, LLC v. Village Supermarkets, Inc.,
806 F.3d 162, 180 (2015). Pursuant to Professional Real Estate Investors, Inc. v. Columbia
Pictures Industries., 508 U.S. 49 (1993) (PRE), a single lawsuit is shielded by the First
Amendment unless it is “objectively baseless,” regardless of the petitioning party’s
subjective intent. In contrast, “when a party alleges a series of legal proceedings . . . the
sham litigation standard from California Motor should govern.” Hanover, 806 F.3d at 180
(emphasis added). This inquiry asks whether a series of petitions was filed with or without
regard to merit and for the purpose of using the governmental process (as opposed to the
outcome of that process) to harm a market rival and restrain trade. Id. See Cal. Motor
Transp. Co. v. Trucking Unlimited, 404 U.S. 508, 510 (1972). In its opinion denying
Defendant’s motion to dismiss, this Court thoroughly reviewed the record and construed
Defendant’s conduct to plausibly comprise a “series” of petitions rather than one single
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litigation; the Court therefore applied the “holistic review” under California Motor, and
found that dismissal under 12(b)(6) would be premature.
The Court’s decision to apply California Motor instead of PRE is not a “controlling
question of law” because the Court likely would have reached the same outcome under
PRE: that Defendant’s alleged conduct is not shielded by Noerr-Pennington.7 There is also
no “substantial ground for difference of opinion” as to which standard applies; Defendant
clearly launched a “series” of freestanding legal attacks against Inserra, not just one
lawsuit.8 Further, appellate review of this matter would require that the Court of Appeals
assess a complex factual record to determine whether Defendant’s various legal actions
comprised a “series” of sham petitions. That type of inquiry is not appropriate for
interlocutory review under § 1292. See Kapossy, 942 F. Supp. 996, 1002 (D.N.J. 1996)
(Section 1292(b) “was never intended to put before the court of appeals ‘legal’ question[s],
in which the exercise of the district court’s discretion is necessarily intertwined with its
understanding of the facts of the case, before the factual record has been fully developed
by the district court.”) Rather than “materially advance the ultimate termination of
litigation,” immediate appellate review would further delay a dispute that has already
dragged on for years. Efficient and decisive use of judicial resources is in order.

Plaintiff alleges several petitions that were “objectively baseless,” thereby satisfying the PRE
standard. 508 U.S. at 51. Specifically, Defendant argued that zoning for “retail food stores” did
not include use of the property for “supermarkets.” Yet, “in the plain and common usage of the
term, a supermarket is clearly a retail food store, and supermarkets were permitted on the subject
property in the past.” Munico Assoc., L.P. v. Inserra Supermarkets, Inc., Sup. Ct. N.J. App. Div.
No. A-0701-14T1 (Aug. 18, 2016). An additional argument—that Boulder Run must be
considered a residential zone—was supported by “nothing in the Wyckoff Zoning Ordinance,”
nor by “any case law or text book.” Decl. D. Steinhagen, Ex. G at 12.
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Defendant argued that its OPRA litigation against Bergen County did not belong to a “series”
of sham litigations because Inserra was not a party to the OPRA suit. In its decision on
Defendant’s 12(b)(6) motion this Court disagreed, and held that the OPRA suit was “clearly
related to Inserra’s land-use application.” ECF No. 36, n. 5 at 7. Indeed, Defendant has since
admitted on appeal before the Superior Court, Appellate Division that “‘a declaration in this
lawsuit that the documents should have been turned over earlier could affect’ its appeal of the
Board of Freeholders' approval of Inserra's site plan application, as Stop & Shop plans to argue
‘the County's indefensible delay in producing the documents deprived it of a fair hearing and due
process of law.’” Stop & Shop Supermarket Co., LLC. v. County of Bergen, et al., Docket Nos.
A-2134-14T1, A-4630-14T1 (N.J. Sup. Ct. App. Div., June 14, 2017).
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IV.

CONCLUSION

For the reasons foregoing, Defendant’s motion for certification pursuant to 28
U.S.C. § 1292(b) is DENIED.

July 27, 2017
/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.

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