# Cine 42nd Street Theater Corp. v. Nederlander Organization, Inc.

> Court of Appeals for the Second Circuit · May 14, 1986 · 790 F.2d 1032

URL: https://www.frixlaw.com/law-library/cases/8941205

## Case

- **Full name:** CINE 42nd STREET THEATER CORPORATION, Leonard Clark and the Brandt Organization, Inc. v. The NEDERLANDER ORGANIZATION, INC. Harris Nederlander, Inc. Jujamcyn Company, Inc. Cambridge Investment Group, Ltd. Park Tower Realty Corp. the New York State Urban Development Corporation Times Square Redevelopment Corporation and the City of New York
- **Court:** Court of Appeals for the Second Circuit
- **Decided:** May 14, 1986
- **Citations:** 790 F.2d 1032; 54 U.S.L.W. 2601
- **Precedential status:** Published
- **Opinion:** Concurrence by Newman
- **Judges:** Cardamone, Miner, Newman
- **Cited by:** 15 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/8941205

## How later opinions describe it (automated extraction)

- holding that "private appellees acting in concert with the UDC are also entitled to state immunity.... [A]llowing successful tangential attacks on the UDC's activities through suits against the third parties would effectively block the efforts of the UDC."
- holding that “private appellees acting in concert with the UDC are also entitled to state immunity.... [Allowing successful tangential attacks on the UDC’s activities through suits against the third parties would effectively block the efforts of the UDC.”
- finding that the urban development corporation created by state statute did not act in the state’s sovereign capacity

## Opinion text

JON O. NEWMAN, Circuit Judge,
concurring:
I concur in Judge Cardamone’s comprehensive opinion for the Court but add a few words to identify a difficulty this case presents in the application of the state action defense to antitrust liability. As the Supreme Court has instructed, the critical inquiry when considering acts that cannot be regarded as those of a state in its sovereign capacity is whether the challenged anticompetitive action has been taken pursuant to a state policy to displace competition with regulation. See Town of Hallie v. City of Eau Claire, 105 S.Ct. 1713, 1716 (1985); City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 413 , 98 S.Ct. 1123, 1137 , 55 L.Ed.2d 364 (1978) (opinion of Brennan, J.). The Court has not insisted that the precise anticompetitive conduct at issue be expressly authorized by state statute. Instead, the Court has been willing to attribute the requisite policy to the state whenever the anticompetitive conduct at issue is a reasonably foreseeable consequence of action that has been expressly authorized. However, the Court has been more willing to deem anticompetitive conduct to be a foreseeable consequence of authorized action when the authorization concerns a narrowly defined range of activity. For example, anticompetitive conduct of tying sewage collection service to sewage treatment service was deemed to be a foreseeable result of narrow statutory authority permitting a town to construct a sewage treatment plant and to refuse to serve unannexed areas. Town of Hallie v. City of Eau Claire, supra. On the other hand, the breadth of home *1049 rule legislation precluded a determination that anticompetitive conduct in the field of cable TV was a foreseeable consequence of the authorizing statute. Community Communications Co. v. City of Boulder, 455 U.S. 40 , 102 S.Ct. 835 , 70 L.Ed.2d 810 (1982).
In this case, we consider a statute of extraordinary breadth. The UDC Act is virtually a charter of governmental authority. Indeed, the activities of the UDC involve a breadth and dollar volume of transactions greater than those undertaken by many states. The UDC’s mandate to improve the urban environment throughout New York State and the accompanying range of delegated powers obviously constitute a more expansive grant of authority than the City of Eau Claire’s power to construct a sewage treatment plant. To speak of any particular anticompetitive conduct as being “foreseeable” in the exercise of the UDC’s broad powers is to mean something rather different than the prospect that sewage collection service would be provided only to those purchasing Eau Claire’s sewage treatment service. Though it was foreseeable, even inevitable, as Judge Cardamone points out, that the UDC’s authority to determine what will be built and who will build in certain areas would produce effects upon business and residences in such areas, it is far less clear that the legislators authorizing the UDC’s broad powers foresaw that the agency would risk undue concentration of market power by placing theater properties in the hands of the three dominant owners of Broadway theaters. Surely further enhancement of their considerable market power is not the only way or even one of the more likely ways a legislature might have expected the UDC to upgrade the quality of life in the Times Square area.
I find the issue of foreseeability to be a close question in this case. I am inclined to resolve it in favor of the state action defense, as Judge Cardamone’s opinion does, because I believe that the inquiry as to foreseeability ought to take into account two variables — not only the scope of the statutory authority but also, and perhaps more important, the proximity of the defendant’s actions to the sovereign authority of the state. Though the breadth of the UDC’s charter makes the foreseeability link rather attenuated, the very nature of the UDC as a virtual ministate cuts the other way, enhancing the appropriateness of recognizing the state action defense. If the range of powers granted to the UDC were granted to a municipal or county agency, operating within a limited geographic area, the state action defense should not insulate the assigning of properties in a manner that would otherwise violate section 7 of the Clayton Act. Yet if the action were taken by New York State itself, the defense would be applicable. Whether a state will really monitor the anticompetitive effects of its actions and tolerate them only to the extent necessary to achieve state objectives will always be a matter of some speculation. But the premise of Parker v. Brown, 317 U.S. 341 , 63 S.Ct. 307 , 87 L.Ed.2d 315 (1943), is that federal courts, in applying the antitrust laws, should assume that Congress accepted the risks of state-authorized displacement of competition. The rationale of that decision persuades me to apply the foreseeability component of the state action defense generously where, as here, the defendant agency, though not technically exercising the sovereign authority of the state, had been accorded statelike powers. Whatever faith Congress has in the ability of a state to monitor anticompetitive consequences of its actions might as well be extended to an agency like the UDC.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/8941205. Public record. Not legal advice.