Antitrust Law Daily Wrap Up, ANTITRUST—S.D. Ill.: Property owners proceed with tax auction conspiracy, monopolization claims, (Apr 8, 2016)

By Greg Hammond, J.D.

Property owners in St. Clair County, Illinois, sufficiently supported claims that the county Treasurer and various investment companies conspired to rig tax auctions. The federal district court in Benton, Illinois, denied the defendants’ motion to dismiss conspiracy and monopolization claims, finding that the property owners adequately alleged an illegal agreement, a cognizable market, injury to that market, exclusionary conduct, and monopoly power (Bloyer v. St. Clair County Illinois, April 7, 2016, Yandle, S.).

The property owners, who had their properties sold at real estate tax auctions, filed suit against the Treasurer of St. Clair County, who conducts the auctions, and several investment companies that purchased the properties at tax auctions. The Treasurer purportedly agreed with each investment company to change the bidding process to ensure that the auctioneer recognized the companies as winning bidders in return for political campaign contributions. The defendants moved to dismiss the Illinois Antitrust Act and Sherman Act conspiracy and monopolization claims.

Limitations. Allegations that the defendants directed contributions to the Democrat Party instead of to the Treasurer, that the Treasurer seated the investment companies at the front of the auction room to facilitate the conspiracy, that other bids were allowed on less lucrative properties in order to cover up the alleged conspiracy, and that the defendants’ conspiracy to rig tax auctions was inherently self-concealing so that the property owners could not have discovered through reasonable diligence that they had been injured until 2014 were sufficient to raise a reasonable inference that the limitations period was tolled until 2014, when the plaintiffs purportedly discovered the injury. The motion to dismiss the claims as barred by the statute of limitations was therefore denied.

Conspiracy. Next, the court found that the homeowners adequately alleged facts to suggest an agreement was made, a cognizable market, and an injury to the market. In particular, the homeowners’ factual allegations included specific details concerning the agreement and how sales were structured to eliminate competition, which was sufficient to plausibly suggest an illegal conspiracy. Second, the homeowner’s allegations sufficiently defined the relevant market in terms of its product (tax lien certificates) and its location (St. Clair County). Lastly, allegations of an inflated penalty rate caused by the defendants’ anticompetitive activity—a rate that the homeowners and hundreds of other property owners would have been forced to pay in order to redeem their properties—were sufficient to establish injury. The motion to dismiss the conspiracy claim was therefore denied.

Monopolization. The motion to dismiss also was denied with regard to the monopolization claim because the homeowners sufficiently pleaded exclusionary conduct and monopoly power. The complaint alleged that (1) assigned seating arrangements placed tax-buyer defendants in the front and purposeful ignoring of non-defendant bidders who were not part of the conspiracy; (2) winning bids were the result of an illegal agreement to eliminate competition in bidding for tax liens; (3) the conduct was exclusionary in that it had the effect of preventing other competitors from receiving the winning bid at the tax sale auctions by fixing, controlling, maintaining, limiting, and/or discontinuing the bidding of lower rates during the auction process; and (4) the arrangement between the defendants prevented competitive bids on less lucrative properties, which were allowed in order to conceal the conspiracy.

The motion to dismiss was also denied with regard to the Illinois Antitrust Act.

The case is No. 14-cv-1119-SMY-PMF.

Attorneys: Aaron G. Weishaar (Reinert Weishaar & Associates, PC) for John R. Bloyer, Jr. Garrett P. Hoerner (Becker Paulson Hoerner & Thompson PC) and Thomas R. Ysursa (Becker, Hoerner, Thompson & Ysursa, PC) for St. Clair County, Illinois.

Companies: St. Clair County, Illinois; Empire Tax Corp.; Vista Securities, Inc.

Cases: Antitrust IllinoisNews