Antitrust Law Daily Wrap Up, ANTITRUST NEWS: City of Tucson allegedly restrained trade by offering Section 8 housing vouchers to tenants, (Aug 6, 2014)

By Linda O’Brien, J.D., LL.M.

The City of Tucson and various city and housing department officials engaged in a conspiracy to interfere with the private housing market and restrain trade by offering Section 8 monetary housing vouchers to tenants and influencing them to breach their existing rental transactions in order to seek housing with certain select landlords, according to a complaint filed in the federal district court of Tucson, Arizona (Konarski v. City of Tucson, August 1, 2014).

Frank, Gabriela, Patricia, John F., and Frank E. Konarski operate a housing rental business known as FGPJ Apartments.

The complaint alleges that the City of Tucson, through various city and housing department officials conspired to pursue a policy of interfering with private housing rental business transactions between landlords and housing tenants. The defendants offer housing tenants monetary incentives (housing vouchers) through the federal Section 8 of the Housing Act program to induce them to knowingly breach their existing rental business transactions and seek housing with landlords selected by the defendants, the plaintiffs claimed.

The anticompetitive scheme has cultivated an anticompetitive environment. The defendants offer a monetary housing voucher to subsidize housing for the foreseeable life of the individual tenants. The tenants are threatened with the loss of the financial incentive if the individual do not breach his or her existing housing arrangement and choose housing of the defendants’ preference, according to the complaint.

The defendants allegedly enable select landlords to enjoy the anticompetitive effect of an artificial influx of housing tenants who apply their monetary vouchers with such selected landlords. The artificial influx was created at the expense of other landlords in the private housing rental business. The plaintiffs are alleged to have attempted to transition existing private tenancies to Section 8 housing program tenancies. However, the defendants have refused to conduct the required inspections of the plaintiffs’ housing unit and refused to allow the plaintiffs’ tenants to apply their monetary housing vouchers at the plaintiffs’ housing units.

The complaint states that the defendants’ practice has caused private market tenants to boycott the plaintiffs’ housing rental business by influencing them to refuse to continue their tenancies at the plaintiffs’ housing to the full terms as set forth in the rental transactions. As a result, the plaintiffs have lost tenancies, contracts, and previously secured sources of revenue.

The plaintiffs assert claims for restraint of trade, and violations of Section 1 of the Sherman Act and the Commerce of the U.S. Constitution. The action seeks declaratory and injunctive relief, compensatory and punitive damages, interest, costs of suit, attorneys’ fees, and any other just and proper relief.

The case is No. 4:14-cv-02264-RM.

Attorneys: Kenneth W. Schutt, Jr. (Schutt Law Firm, P.L.C.) for Frank Konarski, Gabriela Konarski, Patricia Konarski, John F. Konarski, and Frank E. Konarski.

Companies: City of Tucson

News: Antitrust ArizonaNews