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From Antitrust Law Daily, October 27, 2014

Property developer lacked standing to pursue antitrust claims against city over cellphone tower contract

By Linda O’Brien, J.D., LL.M.

A property developer lacked standing to pursue antitrust claims against a city and a third- party vendor for entering into an agreement for the construction of a wireless communications tower for city use and using the city’s exemption from zoning requirements to preclude private developers from participating in the market for leased land for wireless communications towers, the federal district court in Akron, Ohio has decided. Further, the actions of the city were entitled to state-action immunity (Wooster Industrial Park, LLC v. The City of Wooster, October 23, 2014, Lioi, S.).

Wooster Industrial Park, LLC (WIP) owns property in the City of Wooster, Ohio. Wooster Industrial Park Property Management, LLC (WIPPM) is engaged in the leasing, management, and development of property in Wooster. TowerCo is a cell phone tower development company, headquartered in Cary, North Carolina.

The City of Wooster had located wireless communication equipment for certain city services on one of its water towers, which also housed private cellular equipment that provided the City with revenues in the form of rent. In November 2013, the City moved forward with plans to build a separate telecommunications tower on other property owned by the City and passed an ordinance authorizing the city administrator to enter into a contract with a qualified vendor for the construction and maintenance of such facilities.

Subsequently, the City accepted a proposal under which TowerCo would lease a portion of the city property and, in turn, would construct a telecommunications tower so the City could place its equipment on the tower free of charge. TowerCo also was allowed to rent tower space to other cellular providers and would pay the City additional rent for each such rental.

WIP and WIPPM filed suit against the City, the city administrator, and TowerCo, alleging that the City engaged in anticompetitive behavior by using its exemption from zoning requirements to obtain unlimited market power, eliminate meaningful competition, and harm consumers. Specifically, the plaintiffs asserted that the City’s contract with TowerCo allowed it to share the City’s dominant market power and precluded private land owners and private development companies from participating in the market for leasable land for wireless communications towers. The City and TowerCo moved for dismissal.

Standing. The court determined that the plaintiffs failed to sufficiently plead facts to establish antitrust standing. The court noted that, in this case, the plaintiffs only generally alleged that they owned properties for development in Wooster and, prior to the enactment of the ordinance, had contacted at least one cellular provider for possible development of its property for a commercial wireless telecommunications tower. They failed to allege (1) their status as actual competitors in the relevant market, (2) any actual anticompetitive behavior, or (3) any antitrust injury. Moreover, the plaintiffs did not allege any harm to competition in general as opposed to just harm to themselves in particular.

Immunity. Additionally, the actions of the City were entitled to state-action immunity. The court noted that, in the U.S. Supreme Court ruled in Parker v. Brown, 317 U.S. 341 (1943), the antitrust laws did not encompass anticompetitive restraints imposed by a State as an act of government. The City entered into a contract with TowerCo to build a new cellular tower for use by city safety services and the tower was exempt from zoning requirements under the city ordinance. In the court’s view, the City had a legitimate public purpose to build the tower and the mere fact that the City earned rental revenues did not transform the City into a market participant. Moreover, the City had the authority to construct a tower and locate its communications equipment on the tower without having to meet any zoning requirements. Since the action was undertaken for a public purpose, it was not anticompetitive behavior or a displacement of competition, the court stated.

Conspiracy claims. To survive a motion to dismiss, a complaint must set forth plausible allegations of an agreement. The plaintiffs’ allegations – that TowerCo presented the City with a proposal for a land lease and construction of a tower for the City’s use – were actions of business self-interest and did not form the basis for inferring a conspiracy, according to the court. Furthermore, the plaintiffs failed to allege how any action by TowerCo, either individually or in concert, caused them harm. Claims of injury by reason of an antitrust violation are compensable only when the injury arises directly from the unlawful. Although the allegations may sufficiently allege antitrust violation, the plaintiffs’ complaint alleges no injury, the court concluded.

The case is No. 5:13-cv-02729-SL.

Attorneys: Jason M. Storck (Storck Law Office) for Wooster Industrial Park, LLC. Darrell A. Clay (Walter & Haverfield), and Richard R. Benson, Jr., City of Wooster Department of Law, City of Wooster. Adrienne B. Kirshner (Tucker Ellis) for TowerCo, LLC.

Companies: Wooster Industrial Park, LLC; Wooster Industrial Park Property Management, LLC; TowerCo LLC

MainStory: TopStory Antitrust OhioNews

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