Antitrust Law Daily Wrap Up, ANTITRUST—5th Cir.: Conspiracy claims involving attorneys, judge properly rejected, (Aug 24, 2015)

By Greg Hammond, J.D.

A businessman’s Sherman Act conspiracy claims concerning a former business partner’s attorneys and a Texas state court judge, involving a $31 million arbitration award and turnover orders, were properly dismissed. The complaint did not include factual allegations of anticompetitive conduct or an agreement in restraint of trade, according to the U.S. Court of Appeals in New Orleans (Land and Bay Gauging, L.L.C. v. Shor, August 21, 2015, Per Curiam).

Paul Black and Toby Shor were business partners whose relationship soured. A Texas state court entered judgment on a $31 million arbitration award in favor of Shor and ordered Black to turn over assets. Black filed two separate federal actions against Shor, alleging Shor and her lawyers illegally conspired with the state court judge in obtaining the turnover orders. In addition to bringing a Sherman Act claim, Black alleged conversion, tortious interference, abuse of process, restitution, wrongful execution, Computer Fraud and Abuse Act (CFAA), equitable estoppel, judgment forfeiture, and § 1983 claims.

The district court dismissed the complaint, finding Black failed to state a Sherman Act claim and that the court lacked federal jurisdiction over the remaining federal claims under the Rooker-Feldman doctrine. The court additionally declined to exercise supplemental jurisdiction over state law claims. Black appealed.

Conspiracy. The Sherman Act conspiracy claim was properly dismissed for failure to state a claim, the appellate court found. Black claimed the defendants engaged in “skullduggery in procuring the state-court turnover order,” which has nothing to do with antitrust law. Further, Black failed to include factual allegations of anticompetitive conduct or an agreement in restraint of trade.

Rooker-Feldman. The Rooker-Feldman doctrine bars subject matter jurisdiction in federal district court if a federal plaintiff asserts an allegedly erroneous decision by a state court as a legal wrong. The doctrine, however, does not bar a claim that state government defendants violated the federal plaintiffs’ constitutional rights in the course of enforcing the order.

In applying the doctrine, the appellate court determined that the lower court erred in dismissing the § 1983, CFAA, tortious-interference, and abuse-of-process claims, because the timing indicated that judgment itself was the source of the injuries. Conversely, the conversion, equitable estoppel and judgment forfeiture, restitution, and wrongful-execution claims were properly dismissed under the doctrine because the timing of those alleged injuries was before the state court entered judgment. Nevertheless, the court affirmed dismissal of the CFAA and § 1983 claims, finding that Black failed to adequately allege those claims.

The appellate court consequently vacated the lower court’s dismissal of the abuse of process and tortious interference claims and remanded the case so the lower court can determine whether the exercise of supplemental jurisdiction is warranted.

The case is No. 14-40259.

Attorneys: Andy Taylor (Andy Taylor & Associates, PC) for Land and Bay Gauging, LLC. Jean Frizzell (Reynolds Frizzell, LLP) for Toby Shor.

Companies: Land and Bay Gauging, LLC

Cases: Antitrust LouisianaNews MississippiNews TexasNews