Antitrust Law Daily Wrap Up, ANTITRUST—D. Colo.: Student housing operator’s conspiracy to monopolize claims proceed, (Sep 10, 2014)

By Linda O’Brien, J.D., LL.M.

Genuine issues of material fact precluded the grant of summary judgment in an action by an off-campus student housing operator against another apartment complex for conspiring to monopolize collegiate student housing at a university, the federal district court in Denver has ruled (Auraria Student Housing at the Regency, LLC v. Campus Village Apartments, LLC, September 8, 2014, Martinez, W.).

Auraria Student Housing at the Regency, LLC, leases and operates an apartment complex that provides off-campus housing for students attending the University of Colorado, Denver (UCD). In 2004, the UCD contracted with Campus Village Apartments, LLC to construct student housing near the campus. Campus Village and UCD entered into an agreement whereby UCD would institute a residency requirement for most full-time domestic students to live at Campus Village during the first two semesters of enrollment. Auraria filed suit against Campus Village, alleging a conspiracy to monopolize in violation of Section 2 of the Sherman Act, among other claims. Specifically, Auraria alleged that it lost business from new students as a result of the agreement between Campus Village and UCD. In January 2014, Auraria’s motion for summary judgment was denied. Subsequently, Campus Village sought summary judgment on the plaintiff’s claims.

Tying arrangement defense. The elements of a per se unlawful tying arrangement 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. Campus Village contended that its agreement with UCD was a lawful tying arrangement that did not harm the competitive process. According to the court, Campus Village did not present evidence defining the relevant market. Absent such evidence, the court was unable to determine whether UCD had appreciable economic power or whether the agreement with UCD harmed the competitive process.

Although the defendant’s argument that similar mandatory housing requirements were upheld where the university owned the housing facility was compelling, the court noted that Campus Village presented no authority extending a lawful tying arrangement to a situation where the university requires its students to live in housing owned by a third party.

Conspiracy to monopolize claim. The court also determined that genuine issues of material fact existed as to whether Campus Village and UCD had a specific intent to exclude competition in the student housing market and whether Campus Village controlled prices in the student housing market. To establish a claim for conspiracy to monopolize, a plaintiff must show specific intent to monopolize. The arguments of both parties regarding Campus Village’s motivation were plausible and, therefore, questions of fact. Furthermore, the defendant’s evidence that it considered housing rates charged by other local universities before setting rental rates at Campus Village apartments did not show that its housing rates were competitive with those universities.

The case is No. 10-cv-02516-WJM-KLM.

Attorneys: Thomas P. McMahon (Jones & Keller, PC) for Auraria Student Housing at the Regency, LLC. Sarah Levine Hartley (Bryan Cave, LLP) for Campus Village Apartments, LLC.

Companies: Auraria Student Housing at the Regency, LLC; Campus Village Apartments, LLC

Cases: Antitrust ColoradoNews