Antitrust Law Daily Wrap Up, TOP STORY—D. N.J.: Claims of bid-rigging in New Jersey real estate tax auctions may proceed, (Nov 3, 2014)

By Linda O’Brien, J.D., LL.M.

Individuals and businesses whose properties were subject to sale for delinquent real estate taxes could pursue antitrust claims against numerous purchasers of tax liens or tax sale certificates for allegedly engaging in an unlawful conspiracy to allocate bids at municipal auctions of tax liens, the federal district court in Trenton has ruled (In re New Jersey Tax Sales Certificates Antitrust Litigation, October 31, 2014, Shipp, M.).

Individuals and businesses filed a series of class action suits against 55 real estate companies and investors that purchased tax liens or tax sale certificates at municipal auctions, alleging violations of Section 1 of the Sherman Act and the New Jersey Antitrust Act. The plaintiffs asserted that the defendants engaged in a statewide scheme to rig municipal tax sales in order to eliminate competition and obtain possession of tax liens at artificially inflated interest rates. After the plaintiffs’ consolidated complaint was dismissed, the plaintiffs filed an amended pleading. Subsequently, the defendants moved to dismiss the amended complaint.

Sherman Act. The court found that the plaintiffs’ allegations sufficiently established a claim under Section 1 of the Sherman Act. The amended complaint alleged collusion in connection with nearly 50 municipal auctions, setting forth the date and location of each alleged instance of collusion, the identities of the conspirators, and facts regarding each defendant’s conduct in advancing the conspiracy. Moreover, the plaintiffs alleged particularized allegations as the defendants’ participation in collusion with respect to certain auctions, such as instructing their bidders as to which liens they should bid on.

Additionally, the plaintiffs stated sufficient allegations in support of the existence of a statewide conspiracy. According to the court, the amended complaint included allegations regarding when and how the conspiracy was formed, methods for accomplishing the conspiracy, methods for policing the conspiracy, and individual instances of collusion. The plaintiffs also provided extensive allegations of the criminal investigations by the U.S. Department of Justice and other law enforcement agencies, which resulted in indictments and guilty pleas. Furthermore, the plaintiffs’ specific allegations of the defendants’ participation in the multitude of individual collusive auctions provided the necessary facts and circumstantial evidence to establish their claim of a larger overarching conspiracy, the court noted.

Article III standing. To possess Article III standing to pursue their claims, the plaintiffs must have suffered a concrete injury that is fairly traceable to the defendant’s conduct and likely to be redressed by a favorable judicial decision. According to the court, the plaintiffs adequately alleged a statewide conspiracy involving all defendants. It was not relevant that the defendants did not purchase any lien connected to property owned by the plaintiffs or were not present at the auctions where those liens were purchased. Thus, the plaintiffs’ claimed injury was traceable to the defendants’ conduct—their participation in a statewide conspiracy—and the plaintiffs had standing to bring suit, the court concluded.

The case is No. 12-1893.

Attorneys: Andrew R. Wolf (The Wolf Law Firm, LLC), and Bruce Daniel Greenberg (Lite Depalma Greenberg, LLC) for Jeanne Van Duzer Lang Boyer, and Son, Inc. Robert W. Stein, pro se. Christopher Iannicelli (Morgan, Lewis & Bockius, LLP) for Crusader Servicing Corp., Royal Tax Lien Services, LLC, and Royal Bancshares of Pennsylvania, Inc. Steven Mark Janove (Law Offices of Steve M. Janove, LLC) for CCTS Tax Liens II LLC., DSBD LLC. Robin London-Zeitz (Gary C. Zeitz, LLC) for Stein & Zeitz LLC. David Fornal (Maselli Warren PC) for Plymouth Park Tax Services, LLC. Aytan Yehoshua Bellin (Bellin & Associates LLC) for Mtag Services, LLC.

Companies: Son, Inc.; Crusader Servicing Corp.; Royal Tax Lien Services, LLC; Royal Bancshares of Pennsylvania, Inc.; CCTS Tax Liens II LLC., DSBD LLC,; Stein & Zeitz LLC; CCTS, LLC; Plymouth Park Tax Services, LLC; Mtag Services, LLC

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