Antitrust Law Daily Wrap Up, ANTITRUST—D.D.C.: Real estate developer’s bid rigging claims against competitor and local official dismissed, (Feb 7, 2014)

By Linda O’Brien, J.D., LL.M.

A real estate developer failed to allege sufficient facts to pursue claims against a competing developer and public official for engaging in bid rigging in a transit authority’s site development project in violation of the Sherman Act, the federal district court in Washington, D.C. has ruled (Banneker Ventures, LLC v. Graham, February 6, 2014, Collyer, R.). The developer did not allege injury to competition or an agreement among competitors in the real estate market.

In 2007, the Washington Metropolitan Area Transit Authority (WMATA) sought to develop real property located above one of its transit stations and issued a Request for Expressions of Interest for development of the site. Banneker Ventures, LLC , a firm that specializes in construction and property development, submitted a response to the Request, along with eleven other developers. The WMATA later issued a Joint Development Solicitation to six developers, including Banneker and LaKritz Adler Development, LLC (LAD), requesting detailed proposals. The solicitation provided that a developer would be selected, a term sheet negotiated, and an agreement negotiated and completed within 150 days after the WMATA’s board approval of the selected developer. In 2008, the WMATA board selected Banneker as the developer for the site and directed the negotiation of an affordable housing set-aside as part of the project. The WMATA and Banneker signed a term sheet that gave Banneker the exclusive right for a limited time to negotiate an agreement for the development of the site. Through 2010, Banneker and WMATA staff continued to revise and the term sheet; however, the board did not approve the revised term sheet and no final development agreement was ever reached. After several extensions, Banneker’s exclusive right to negotiate expired.

Banneker filed suit for unlawful restraint of trade, among other claims, against LAD and Jim Graham, a District of Columbia council member and WMATA board member, alleging that Graham engaged in bid suppression and bid rigging in violation of Section 1 of the Sherman Act. Banneker claimed that Graham objected to the choice of Banneker as the selected developer and interfered with Banneker’s attempts to finalize the term sheet and development agreement. His alleged goal was to designate LAD, a major contributor to his campaign and constituent services fund, as the selected developer of the site. The defendants moved to dismiss the complaint.

The court determined that Banneker failed to state an antitrust claim under the Sherman Act since it made no allegations of injury to competition or of an agreement among individuals who were competitors in the real estate development market. The Sherman Act requires that, to pursue a claim, the defendants entered into an agreement for concerted activity, the agreement did or was intended to restrict trade in the relevant market, and the agreement affected interstate commerce. The alleged conduct by LAD and Graham may have harmed one competitor—Banneker—but it was not alleged to have harmed competition in the marketplace. Further, Graham was a public official and not a developer. Banneker’s assertion that Graham colluded with LAD alleges an agreement between a competitor and a third-party instead of collusion among competitors. Thus, the defendants’ motion to dismiss for failure to state a claim was granted.

The case is No. 13-391 (RMC).

Attorneys: Jerry L. Malone (Law Offices of Jerry L. Malone) for Banneker Ventures, LLC. John R. Hoellen, Council of the District of Columbia, for Jim Graham and Lakritz Adler Development, LLC.

Companies: Banneker Ventures, LLC; Lakritz Adler Development, LLC

Cases: Antitrust DistrictofColumbiaNews