Antitrust Law Daily Wrap Up, ANTITRUST NEWS: Real estate developer’s TV, Internet agreements with homeowners associations allegedly restrain trade, (Jan 7, 2016)

By Linda O’Brien, J.D., LL.M.

The real estate developer of three neighborhoods in Thompson’s Station, Tennessee, and its related entity have engaged in anticompetitive conduct by entering into communications agreements with the neighborhood homeowners associations for the exclusive provision of the television and Internet services, according to a complaint filed in the federal district court in Nashville, Tennessee (Cates v. Crystal Clear Technologies LLC, January 5, 2016).

Courtney Cates, Brian Stover, and Jason Miller own homes in the Bridgemore, Tollgate, and Canterbury neighborhoods in Thompson’s Station, Tennessee. Residential builder Carbine & Associates is the real estate developer of the Bridgemore and Tollgate neighborhoods, is the co-developer of the Canterbury neighborhood with Hood Development, and created homeowner’s associations for each of those neighborhoods.

The complaint states that in October 2005, Crystal Clear Technologies, a related entity of Carbine & Associates, entered into a non-exclusive agreement with the City of Thompson’s Station that granted it the right to use the streets and dedicated easements for the construction and operation of a cable system that would provide television and Internet to Crystal Clear subscribers. Subsequently, Crystal Clear entered into communications agreements with the Tollgate Village, Bridgemore Village, and Canterbury homeowners associations.

Under the communications agreements, every homeowner in the three neighborhoods was required to pay the developer or Crystal Clear $1,500 for the installation of the telecommunications network. Absent the agreements, the complaint states, such infrastructure costs would have been absorbed by the developer as part of the development of the subdivisions. Additionally, the agreements require homeowners to purchase television service from Crystal Clear, regardless of whether the homeowner actually uses the service.

According to the complaint, Crystal Clear does not have a separate telecommunications network to allow it to deliver television content or high speed Internet to the homes in the neighborhoods. Thus, Crystal Clear must obtain this from another provider and contract with DirecTV to allow it to provide these services to homes in the neighborhoods.

The complaint also alleges that the agreements allow Crystal Clear to maintain a monopoly on the provision of television and Internet services to the neighborhoods and allows DirecTV to be the exclusive provider of telecommunications to Crystal Clear. These arrangements are not intended to benefit the homeowners but rather to give the developers another revenue stream, the complaint asserts. Furthermore, the agreements are allegedly unreasonable restraints of trade that lack legitimate procompetitive justifications.

The plaintiffs assert claims for unjust enrichment, as well as unlawful tying and unlawful market allocation in violation of Section 1 of the Sherman Act. The action seeks declaratory and injunctive relief, treble damages, costs of suit, attorney fees, and any other just and proper relief.

The case is No. 3:16-cv-00008.

Attorneys: Benjamin A. Gastel and J. Gerard Stranch, IV (Branstetter, Stranch & Jennings PLCC) for Courtney Cates, Brian Stover, and Jason Miller.

Companies: Crystal Clear Technologies LLC; Carbine & Associates LLC; Hood Development, LLC; Tollgate Village Association Inc.; Bridgemore Village Owners’ Association Inc.; Canterbury Homeowners Association Inc.; DirecTV, LLC.

News: Antitrust TennesseeNews