Antitrust Law Daily Wrap Up, ANTITRUST—N.D. Ill.: Joliet Intermodal Zone federal antitrust case sidelined for state court traffic to pass, (Sep 24, 2024)

By Justin Marcus Smith, J.D.

The federal district court determined that both cases turned on the same underlying dispute about a toll bridge memorandum of understanding with the City of Joliet.

Pending state court proceedings about heavy truck access to the Joliet Intermodal Zone called for a stay, rather than dismissal, of a federal antitrust dispute between competing warehouse operators, held the federal district court in Chicago. The court held the Rooker-Feldman doctrine did not apply to dismissal because the instant federal court plaintiff was not a “party” and thus not a “state-court loser” in the pending state court action; therefore, Rooker-Feldman was not a ground for dismissal. The fact that the state court action was far from over was a second reason Rooker-Feldman did not apply. Having determined that the state court action and the instant federal matter both involved an underlying agreement with the City of Joliet affecting heavy truck access, and disposition of the former would likely determine the latter federal claims, the court denied, without prejudice, the defendants motion to dismiss for failure to state a claim (East Gate-Logistics Park Chicago, LLC v. CenterPoint Properties Trust, No. 1:24-cv-03742 (N.D. Ill. Sept. 23, 2024)).

East Gate-Logistics Park Chicago, LLC (East Gate) and NorthPoint Development, LLC (collectively, East Gate) brought an antitrust action against CenterPoint Properties Trust (CPT), CenterPoint Joliet Terminal Railroad, LLC (CJTR, and collectively with CPT, CenterPoint), and Houbolt Road Extension JV, LLC (HRE). NorthPoint theorized that CenterPoint monopolized and blocked competitors from the commercial warehouse market near two large railroad terminals in Joliet, Illinois, about 40 miles south of Chicago (the Joliet Intermodal Zone).

CenterPoint began acquiring land in the Joliet Intermodal Zone in the early 2000s to develop warehouse and distribution space. Warehouse landlords in the Joliet Intermodal Zone can rent their space at a premium because proximity to intermodal loading and unloading of rail traffic substantially simplifies and reduces trucking costs.

Starting in 2013, East Gate began to plan a competing warehouse development in the Joliet Intermodal Zone. East Gate alleged CenterPoint entered a memorandum of understanding (MOU) with the City of Joliet (Joliet), the Will County Department of Transportation, and the Illinois Department of Transportation, to develop a toll bridge connecting the Joint Intermodal Zone with the nearest interstate highway. East Gate said it had separately obtained approval from Joliet to construct a temporary connection to Millsdale Road, and without that temporary connection, trucks would have no way to travel between East Gate and the Joliet Intermodal Zones due to weigh restrictions on local roads. However, in 2022, HRE sued Joliet in Illinois state court seeking to enforce the Joliet MOU. As part of that pending lawsuit, HRE obtained a temporary restraining order (TRO) blocking East Gate from using Millsdale Road. East Gate alleged that HRE was using the TRO to block East Gate and others from entering the Joliet Intermodal Zone warehousing market to compete with CenterPoint. HRE maintained it was only trying to avoid losing toll bridge revenue to the temporary connection to Millsdale Road.

On May 8, 2024, less than two months after the state court entered its TRO, East Gate filed this action in federal court seeking to invalidate the MOU under antitrust law and to restore truck access to Millsdale Road via the temporary connection. East Gate moved for a preliminary injunction and expedited discovery, but CenterPoint and HRE filed motions to stay pending disposition of the state court action or dismissal for lack of subject matter jurisdiction or failure to state a claim.

The motions asked the court to dismiss for lack of subject matter jurisdiction under the Rooker-Feldman doctrine, or that the matter be stayed pending resolution of the state court action under the Colorado River doctrine. If neither the doctrine applied, the motions asked the court to dismiss the matter for failure to state a claim.

The court considered the Rooker-Feldman arguments first because the Rooker-Feldman doctrine could operate as a jurisdictional bar. The court noted that the Seventh Circuit recently issued a comprehensive opinion addressing the limited circumstances for application of Rooker-Feldman. Of the five Rooker-Feldman elements, the court focused on the first, i.e., whether East Gate, the federal plaintiff in the instant matter, was a “state-court loser” in the pending state court matter.

Rooker-Feldman inapplicable. The court held the Rooker-Feldman doctrine was inapplicable because it found East Gate’s limited involvement in the state court action did not make it a party to that action for Rooker-Feldman purposes. Although HRE designated East Gate as an interested party in the state court action, it did not name East Gate or NorthPoint at all. East Gate did not file an appearance, respond to the complaint, or appeal the TRO. The court also found the scope of the state court TRO was limited to the contractual relationship between HRE and Joliet. The state court did not enter any relief against East Gate, albeit, the TRO affected East Gate’s interests and East Gate appeared to be in separate contractual privity with Joliet.

Moreover, the court declined to expand the meaning of “party” under the Illinois Code of Civil Procedure to include interested parties, like East Gate here. Because the court found East Gate was not a “state-court loser,” it held Rooker-Feldman did not apply. In addition, the court found the “final judgment” element of Rooker-Feldman did not apply to the state court proceedings because the state court case was “nowhere near” over. A TRO just entered in March 2024. Despite the immediate applicability of the TRO, the court held the TRO was not a Rooker-Feldman “final judgment.”

Abstention. Despite formal differences between the state court and federal actions, the court found the two cases involved substantially the same parties because the parties had nearly identical interests. Both cases revolved around the MOU. The viability of the East Gate and NorthPoint development plans will rise and fall based on the outcome of the state court action and corresponding terminal access. The court reasoned further that the East Gate and NorthPoint federal antitrust claims at issue in the instant action will only become relevant if the state court renders a final judgment accepting HRE’s interpretation of the MOU.

The court concluded here that the eventual disposition of the state court action will likely dispose of all claims presented in the instant federal matter. The cases were parallel despite the state court action being primarily about the MOU contract. State contract issues predominated in both actions. The court concluded that the pending state court dispute over the MOU presented exceptional circumstances that warranted a stay. The court held deference to the state court action was appropriate and required a stay of the instant federal antitrust proceedings. The court denied the remaining pending motions without prejudice.

The Case is No. 1:24-cv-03742.

Judge: Hunt, L.

Attorneys: Herbert F. Allen (Honigman LLP) for East Gate-Logistics Park Chicago, LLC and NorthPoint Development, LLC. Gary Feinerman (Latham & Watkins LLP) for CenterPoint Properties Trust, CenterPoint Joliet Terminal Railroad, LLC and Houbolt Road Extension JV, LLC.

Companies: East Gate-Logistics Park Chicago, LLC; NorthPoint Development, LLC; CenterPoint Properties Trust; CenterPoint Joliet Terminal Railroad, LLC; Houbolt Road Extension JV, LLC

Cases: Antitrust IllinoisNews GCNNews