Federal Antitrust Claims Against Simon Property Group To Go To A Jury

Summary:

On March 18, 2016, Judge Jon E. DeGuilio of the United States District Court for the Northern District of Indiana issued an order denying Simon Property Group’s motion for summary judgment as to the antitrust claims of the plaintiff, Gumwood HP Shopping Partners, L.P. Here is a copy of that decision. In this case, Price Waicukauski Joven & Catlin, LLC represents Gumwood, which developed a new lifestyle center in Mishawaka, Indiana, called Heritage Square. Simon is the largest public real estate company in the country and owns University Park Mall, the only mall in Mishawaka. Gumwood negotiated with national retailers such as Ann Taylor and signed a lease agreement with Ann Taylor to open a LOFT store at Heritage Square in the fall of 2006. Gumwood alleges that Simon’s anticompetitive conduct caused Ann Taylor not to honor its lease and open a store at University Park Mall’s outdoor component, rather than Heritage Square.

Gumwood believes that Simon Property Group violated federal antitrust laws by engaging in an illegal tying arrangement in violation of Section 1 of the Sherman Act (which prohibits agreements in restraint of trade) and Section 2 of the Sherman Act (which prohibits the use of anticompetitive means to create or maintain a monopoly). Specifically, Gumwood has evidence that Simon refused (or threatened to refuse) to renew Ann Taylor’s leases in other top centers owned by Simon (the “tying centers”) unless Ann Taylor signed a lease at University Park or agreed to stay out of Heritage Square. In its motion for summary judgment, Simon argued that there was insufficient evidence to show that it actually imposed a tie between any of its properties. The Court disagreed and found that a jury should determine whether Simon engaged in this conduct.

Although Simon executives denied executing such a strategy, the Court noted various internal Simon documents “reference plans to impose a tie and suggest that threats consistent with those plans had in fact been communicated to Ann Taylor.” For example, one Simon document stated “We need a positive decision on University Park before we will move forward with any key renewals. Woodbury and Lenox would be prime centers to kill if the negotiations go south.” And Simon’s emails made similar statements:

  • “[They [Ann Taylor] do have an executed lease, with [H]eritage, however, the developer has yet to satisfy the co tenancy. (expires in Dec of this year). We are putting the full court pressure on all others who are interested in the market[.] I was very clear that their decision can and will jeopardize our willingness to proceed on new deals and renewals.” (emphasis added).
  • “Scotti [Ann Taylor’s lead negotiator] may be gone by year end. I do not know what he has or has not communicated to her [Kay Krill, Ann Taylor’s CEO] about losing high producing stores (Lenox, Stanford, Woodbury…) [i]f Mishawaka is not resolved to our satisfaction.”
  • “On the Ann Taylor front. Scotti has his ass in hot water and knows it. We have been very aggressive with him on cleaning up some existing problems prior to us addressing any key renewals so please hold off on woodbury.  If he does not rectify his actions we are considering canceling [] 2 deals so his actions are not repeated.”
  • “I will still help where needed but in essence DS [David Simon] is trying to meet with Kay Krill. I don’t believe John [Scotti] has told Kay the severity of the situation. If they go ahead with Heritage we’re going to cancel Woodbury and Dadeland.  Lose a pinky – take an arm!” (punctuation and capitalization modified for clarity.).

Price Waicukauski Joven & Catlin, LLC is proud to represent Gumwood in this important case, as we believe in fighting for fair competition, even if that means taking on some of the biggest companies in the world.

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