Opposition Brief — Serfecz v. Jewel Food Stores, Inc.

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No. 95-1064

In The — — ee |

Supreme Court of the United States

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October Term, 1995

JOSEPH SERFECZ and FIRST CHICAGO TRUST

COMPANY OF ILLINOIS, TRUSTEE OF TRUST NO. 684,

Petitioners

VS.

JEWEL FOOD STORES, INC. and AMERICAN STORES

PROPERTIES, INC.,

Respondents

On Petition for a Writ of Certiorari to the United States

Court of Appeals for the Seventh Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

DAVID MARX, JR.

Counsel of Record

ANNE PRAMAGGIORE

McDERMOTT, WILL & EMERY

Attorneys for Respondents

227 West Monroe Street

Chicago, Illinois 60606

(312) 372-2000

8228

(800) 3 APPEAL « (800) 5 APPEAL * (800) BRIEF 21

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QUESTION PRESENTED

Whether the Seventh Circuit Court of Appeals properly held

that petitioners, who are owners of a retail shopping center, do

not have the requisite direct injury to have standing to assert that

respondents monopolized, or conspired with others to

monopolize, the retail grocery market in violation of the

Sherman Act.

LIST OF PARTIES

1. Jewel Companies, Inc. is the parent of Jewel Food Stores,

Inc. American Food and Drug, Inc. is the parent of American

Stores Properties, Inc.

2. American Stores Properties, Inc. is the parent of

American Stores Properties, Inc.-One and American Stores

Properties Financing Company, Inc. Jewel Food Stores, Inc. is

the parent of: Jewel Buy-In Corporation; Jewel Tea Co., Inc.;

Star Market Liquors, Inc.; MFC Livoria Properties, Inc.; and

Jetco Properties, Inc.

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TABLE OF CONTENTS

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C. The Relationship Between Jewel and Serfecz .. 2

D. The Origin of the Antitrust Litigation ......... 5

Reasons for Denyingthe Writ ..................05. 7

I. The Seventh Circuit Court of Appeals Properly

Held that Serfecz Lacks Standing to Assert That

Jewel's Conduct In the Retail Grocery Store

Market Violated the Antitrust Laws. .......... 7

A. The Seventh Circuit Applied the Proper

Analytic Framework in Evaulating Whether

Serfecz Had Standing to Sue Under the

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B. SerfeczHas Not Suffered AntitrustInjury. .. 9

C. Serfecz is Not An Appropriate “Private

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TABLE OF CITATIONS

Cases Cited:

Adams v. Pan American World Airlines, Inc., 828 F.2d 24

(D.C. Cir. 1987), cert. denied, 485 U.S.934(1988) . 1]

Alpha Shoe Serv. v. Fleming Cos., 849 F.2d 352 (8th Cir.

1988), cert. denied, 488 U.S.942(1988) .......... 14

AmericanAgric. Movement v. Board of Trade, 848 F. Supp.

De Oe es ROOD 06 0bbdse0n kpaeendensedssuns 12

Ashmore v. Northeast Petroleum Div. of Cargill, Inc., 843

Fu. Fa Ms SHED vac ncaksccnctesiesdese 13

Associated General Contractors, Inc. v. California State

Council of Carpenters, 459 U.S.519(1983) .. 7,8,9, 13,14

Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982)

Bodie-Rickett & Assocs. v. Mars, Inc., 957 F.2d 287 (6th

Ci PE sboautaehvedcsuetsdbasskinetawecws 11

a a Te

Contents

Page

Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477

CRUTED, ak sncdaydedeae sauce bea eeesaeaee tea 7,8,9,10

Donahue v. Pendleton Woolen Mills, Inc., 633 F. Supp.

Pest, 8 A. | errr rer yr Per 13

Harrison v. Paramount Pictures, 115 F. Supp. 312 (E.D.

Pa. 1953), aff’dper curiam, 211 F.2d 405 (3d Cir.), cert.

Gemiad, 46 US. G26 CIGS4S) .occvasccccscccssses 1]

In Re Industrial Gas Antitrust Litig., 681 F.2d 514 (7th Cir.

1982), cert. denied, 460 U.S. 1016(1983) ......... 13,14

In Re Lower Lake Erie Iron Ore Antitrust Litig., 998 F.2d

je oik le Sy re ern mm) Frys 13

International Raw Materials, Ltd. v. Stauffer Chem. Co.,

978 F.2d 1318 (3d Cir. 1992), cert. denied, 113 S. Ct.

SS CRUOOD a acccccaccekeascenah esse secre 11

Jewel Cos., Inc. v. Serfecz, 220 Ill. App. 3d 543, 581 N.E.

vet 6) 4d) ree rer ry ere rrr rr 2,3

Melrose Realty Co. v. Loew’s, 234 F.2d 518 (3d Cir.), cert.

denied, 332 U.S. S90 (1956) ....ccccccccceccecss 11

Ostrofe v. H.S. Crocker Co., 740 F.2d 739 (9th Cir. 1984)

eo 6662666668 8688 OS8 8 62K SE ES 4B £.42 64S COSA LA Cee eS Ss

R.C. Dick Goethermal Corp. v. Thermogenics, 890 F.2d

ASDC, 19D) occ cccccdcscvccevsdansassaes 1]

Contents

Page

Rosenberg v. Cleary, Gottlieb, Steen & Hamilton, 598 F.

Sapp. 642 (B.D. N.Y. 1966) .ccccccscccccossesess 12

South Haven Land Co. v. Malone and Hyde, Inc., 715 F.2d

SOTO GEIGE, WIGS) cccccccccccesbsdutessuvtede 11,12

Southwest Suburban Bd. of Realtors, Inc. v. Beverly Area

Planning Ass'n, 830 F.2d 1374 (7thCir. 1987) ..... 11

Statute Cited:

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Rule Cited:

Supreme Court Rule 10(a) ........ 6.660 c ccc eeeeeee 7

APPENDIX

Appendix A — Opinion of the United States Court of

Appeals for the Seventh Circuit Decided September 26,

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Appendix B — Memorandum Opinion of the United States

District Court for the Northern District of Illinois,

Eastern Division Dated August 30,1994 .......... 30a

OPINIONS BELOW

The Opinion of the United States Court of Appeals for the

Seventh Circuit was rendered on September 26, 1995 and

reported at 67 F.3d 591. The Memorandum Opinion of the

District Court for the Northern District of Illinois was entered on

August 30, 1994. Because portions of the Court of Appeals’ and

District Court’s opinions were omitted from the versions that

were reprinted in the Appendix to Petitioners’ Petition for a Writ

of Certiorari, they are reprinted in their entirety in Respondents’

Appendix at pp. la-25a and 26a-72a, respectively.

STATEMENT OF THE CASE

A. The Parties

Petitioner First Chicago Trust Company of Illinois, as

trustee, is the title holder of the property known as the Grove

Mall, a retail shopping center in Elk Grove Village, Illinois.

(Seventh Circuit Opinion at 1,3, Respondents’ Appendix pp. 1a,

3a). Petitioner Joseph Serfecz is both the beneficial owner of this

trust and the owner of the management company which operates

Grove Mall. (Petitioners hereinafter will be collectively referred

to as “Serfecz”.)

Respondent Jewel Food Stores, Inc. operates retail grocery

stores and combined Jewel/Osco stores that sell grocery and

drugstore items. Respondent American Stores Properties, Inc. is

the real estate management and development arm of American

Stores Company and its subsidiaries, of which Jewel is one.

(District Court Opinion at 2, Respondents’ Appendix p. 31a).

(Respondents hereinafter will be collectively referred to as

“Jewel”.)

B. The Jewel Lease

In July 1963, Jewel and Serfecz’ predecessor-in-interest

entered into a lease for Jewel to rent retail space in Grove Mall.

Jewel Cos., Inc. v. Serfecz,220 I. App. 3d 543, 544,581 N.E.2d

186 (1st Dist. 1991). The lease’s financial terms are extremely

favorable to Jewel — other than as required for a 1971

enlargement of the premises, Jewel’s rent has not increased since

the lease was executed in 1963. Additionally, Jewel has no

obligation to pay any real estate taxes on the property.

Other lease terms afford Jewel flexibility in its use,

assignment, or subieasing of the premises. In contrast to the

leases of other Grove Mall tenants, Jewel’s lease does not require

Jewel to continuously operate a retail grocery store in its space.

(District Court Opinion at 38-39, Respondents’ Appendix pp.

62a-63a). Similarly, if Jewel vacates the premises, it is not

required to sublease its space; if Jewel chooses to sublease its

space, however, Jewel may sublease it to any entity for any

lawful purpose, except for use as a drugstore or a bakery, subject

only to the stipulation that the landlord’s approval is required if

a proposed subtenant would increase the cost of insurance to the

landlord.

C. The Relationship Between Jewel and Serfecz

Serfecz was not the owner of the Grove Mall when Jewel

entered into its Grove Mall lease in 1963, but purchased the

shopping center in 1977. In the transaction, Serfecz voluntarily

assumed the Grove Mall’s existing mortgages and existing

leases with its tenants. (Seventh Circuit Opinion at 2,

Respondents’ Appendix p. 2a). Over the course of the parties’

relationship, however, Serfecz consistently has challenged

Jewel’s right to the benefit of the lease’s terms.

In 1971, exercising an option under its lease, Jewel enlarged

its premises. Under the terms of the lease, Jewel was required to

pay increased rent but was entitled to recoup a portion of this rent

increase to cover the cost of construction. Beginning in 1971,

Jewel exercised its right of recoupment. Serfecz, 581 N.E.2d

at 188.

In September 1987, a dispute arose over the amount Jewel

was entitled to recoup. When the parties could not reach

agreement, Serfecz served Jewel with a landlord’s Ten Day

Eviction Notice. To avoid eviction, Jewel returned the disputed

“excess recoupment,” but filed a declaratory judgment in state

court seeking a construction of the recoupment clause in the

lease because Jewel believed its interpretation of the contract

provision was consistent with the Original parties’ intent.

Serfecz, 581 N.E.2d at 188. Although the trial court agreed with

Jewel's interpretation of the lease, the Illinois Appellate Court

reversed. Serfecz, 581 N.E.2d at 190.

While this dispute over the recoupment clause was ongoing,

Jewel was approached about the possibility of opening a Jewel/

Osco store in a new mall to be built in Elk Grove Village. In

addition to offering newer, bigger, and more attractive space, the

Elk Crossing Mall permitted Jewel to make a significantly

different use of its retail space — to operate a Jewel/Osco

facility.' In October 1987, Jewel vacated its Grove Mall space

and opened its new Jewel/Osco store in Elk Crossing Mall.

Upon opening its store in the Elk Crossing Mall, Jewel

began trying to sublease its space in Grove Mall and engageda

1. Jewel was barred from opening an Osco in the Grove Mall because

Walgreens, another Grove Mall tenant, had the exclusive right to sell

prescription drugs there. (District Court Opinion at 29, Respondents’

Appendix at 54a).

real estate leasing company to obtain a subtenant. Although the

premises were difficult to lease because of its large size, the

Grove Mall’s age and design, and the relatively short term for

which the lease was available, the leasing company made

continuous attempts to lease the Grove Mall space. In 1989,

Jewel proposed to sublet the space to United Skates, a roller-

skating rink operator based in Columbus, Ohio. (Seventh Circuit

Opinion at 3, Respondents’ Appendix p. 3a). Serfecz objected to

the proposed sublessee, however, contending that leasing space

to United Skates would increase his insurance costs. Despite

Jewel’s offer to pay any increased insurance costs that Serfecz

might incur by having United Skates as asubtenant, and agreeing

to reimburse Serfecz for all costs Serfecz might incur when the

sublease expired (for example, removing the fixtures that United

Skates would add to the premises), Serfecz rejected both offers

and threatened legal action against Jewel to block the proposed

sublease.

Then in February 1990, without Jewel’s permission,

Serfecz entered Jewel’s leased premises in Grove Mall and

changed the locks to prevent Jewel from subleasing or even

entering its premises. (District Court Opinion at 41,

Respondents’ Appendix p. 65a). In response to this trespass,

Jewel sought and obtained a restraining order from the Circuit

Court of Cook County temporarily barring Serfecz from the

premises. (District Court Opinion at 44, Respondents’ Appendix

p. 67a). Jewel then asked the court to decide whether, under the

lease, Serfecz’ refusal to approve United Skates as a subtenant,

on the ground that United Skates’ subtenancy would increase

Serfecz’ insurance costs, was proper. The key issue at trial turned

out to be which party had the burden of proof on the issue of

whether United Skates as a subtenant would increase Serfecz’

insurance costs. The trial court held that Jewel had the burden of

proof on this issue, and that Jewel had failed to meet that burden.

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D. The Origin of the Antitrust Litigation

In December 1991, Serfecz told Jewel that acompany called

Grove Central Grocers, Inc. (“Grove Grocers”) was interested in

subleasing Jewel’s vacant space. Because Grove Grocers was a

new start-up company unknown to Jewel, Grove Grocers was

asked to provide basic financial information and a business plan

to establish its creditworthiness. This information was never

provided. Instead, Serfecz filed a declaratory judgment action

and a motion for a temporary restraining order in the Circuit

Court of Cook County, seeking possession of Jewel’s premises

and an order directing Jewel to sublease its space to Grove

Grocers. In this state court action, Serfecz claimed that Jewel

was violating federal and state antitrust laws as well as state

common law by keeping vacant the Jewel premises in Grove

Mall and by refusing to lease its space to Grove Grocers.

On February 26, 1992, after a full hearing on Serfecz’

motion for a temporary restraining order, Judge Francis Barth of

the Circuit Court of Cook County denied Serfecz’ request in its

entirety and questioned the merit of his declaratory judgment

action. In light of Judge Barth’s ruling, Serfecz voluntarily

dismissed his state court action and immediately filed this

federal court action, essentially recasting his state court

allegations as federal antitrust claims.

On June 25, 1992, Serfecz filed a four-count complaint in

federal court against Jewel and several other defendants. Count

I alleged that Jewel violated Sherman Act Section 1 by

conspiring to restrain trade in two distinct product markets —

“grocery and grocery-related items” and the “operation of a

retail shopping center.” Count II alleged that Jewel had violated

Sherman Act Section 2 by monopolizing, attempting to

monopolize and conspiring to monopolize the same two product

markets. Count III alleged that Jewel was liable for malicious

prosecution by bringing prior state court lawsuits. Count IV

alleged that Jewel breached its lease with Serfecz.

On August 30, 1994, Judge Grady of the District Court for

the Northern District of Illinois granted summary judgment for

Jewel on all antitrust counts (plus one state law count), leaving

Serfecz with a single remaining claim for breach of lease.

(District Court Opinion at 1, Respondents’ Appendix p. 30a).

(This breach of lease claim is set for trial in June of 1996.*). On

September 26, 1995, after a full briefing and oral argument, the

Seventh Circuit Court of Appeals affirmed the District Court’s

ruling inits entirety. (Seventh Circuit Opinion at 2, Respondents’

Appendix p. 2a).

2. Inhis Petition, Serfecz states that “[o)n or about February 1, 1994,

plaintiffs entered into a development contract with Joseph Freed and

Associates, areal estate development company. The agreement is contingent

upon obtaining possession of the premises claimed by Jewel. Plaintiff is

unable to go any further toward redevelopment while Jewel claims possession

of the premises.” (Petition at 4).

Serfecz has failed to disclose that on February 14, 1994, the Village of

Elk Grove held a hearing to declare the Grove Mall a blighted area and filed an

action for condemnation against Serfecz and the Grove Mall in January 1995.

Jewel's premises are included as part of the action. The condemnation

proceeding seeks to provide Serfecz with reasonable compensation in

exchange for which the Village of Elk Grove will obtain ownership rights to

Serfecz’ property. It is the condemnation proceeding, not Jewel's continued

possession of the premises, that has prevented Serfecz from contracting with

a developer to revitalize the Grove Mall.

REASONS FOR DENYING THE WRIT

THE SEVENTH CIRCUIT COURT OF APPEALS

PROPERLY HELD THAT SERFECZ LACKS STANDING

TOASSERT THAT JEWEL’S CONDUCT IN THE RETAIL

GROCERY STORE MARKET VIOLATED THE

ANTITRUST LAWS.

Serfecz now petitions this Court to review one issue —

whether the Seventh Circuit properly held that Serfecz, the

owner of aretail shopping center, lacks the requisite direct in jury

to have standing to assert that Jewel monopolized, or conspired

with others to monopolize, the retail grocery market in violation

of the Sherman Act. In his Petition for A Writ of Certiorari

(“Petition”), Serfecz argues that this Court should grant

certiorari because the Seventh Circuit's decision is contrary to

the Court’s precedent on standing and conflicts with the

decisions of other circuits.’ The Seventh Circuit's decision does

not depart from Supreme Court precedent, create a split in the

circuits, present a novel question of law or otherwise raise an

issue that this Court should address. Indeed, review of this case

will require this Court to do nothing more than rehash the

standing analysis that it put into place years ago and to which the

Seventh Circuit and other circuits have faithfully adhered.

Contrary to Serfecz’ assertions, the Seventh Circuit’s

analysis cites and adheres to the Supreme Court’s analysis of

standing as set out in Associated General Contractors, Inc. v.

California State Council of Carpenters, 459 U.S. 519 (1983),

and Brunswick Corp. v. Pueblo Bowl-O-Mat, 429 U.S. 477

3. Although he fails to cite to the Supreme Court rule which sets forth the

factors considered by the Court in deciding whether to grant a Petition,

Supreme Court Rule 10(a) must be the basis for Serfecz’ Petition.

(1977). Furthermore, the Seventh Circuit's opinion is consistent

with the substantial body of law generated by the circuit and

district courts, several of which address standing based upon

facts virtually indistinguishable from those in this case and reach

the same conclusion as the Seventh Circuit.

Finally, denial of Serfecz’ Petition will not leave him

without a remedy for his alleged injury. This lawsuit is an attempt

by Serfecz to convert acommercial landlord-tenant dispute into

a federal antitrust action. Ironically, the district court recognized

that Serfecz had stated one claim, for breach of lease, which is

scheduled to be tried in June 1996. Thus, denying Serfecz

standing to assert a claim under the antitrust laws does not bar

him from the courthouse; it only precludes him from seeking the

extraordinary remedy of treble damages. That result is consistent

with this Court’s view of antitrust standing, which limits the

availability of this extraordinary remedy to only those plaintiffs

who are most directly affected by an antitrust violation and

whose injury is of the type the antitrust laws are designed to

prevent. Under the facts of this case, Serfecz is not one of those

plaintiffs.

A. The Seventh Circuit Applied the Proper Analytic

Framework in Evaluating Whether Serfecz Had Standing

to Sue Under the Antitrust Laws.

The Seventh Circuit began its analysis by recognizing that

Clayton Act § 4, 15 U.S.C. § 15, the sole source of Serfecz’

private right of action to sue for violations of the Sherman Act,

despite its seemingly broad language, has been construed by this

Court to limit the parties who may bring an antitrust action. In

Brunswick, this Court held that the ability to maintain an antitrust

action would be limited to those who have suffered the type of

injury that the antitrust laws were intended to prevent and that

flows from that which makes defendant’s acts unlawful.

Brunswick, 429 U.S. at 489. Associated General Contractors,

focusing on Congress’ intent to have the antitrust laws construed

in light of the common law, reaffirmed and expanded upon

Brunswick, by reading Clayton Act Section 4 to contain a

proximate cause element. This proximate cause element acts to

deny standing to plaintiffs whose injuries are indirect or

secondary, particularly when there exist more directly affected

parties. Associated General Contractors, 459 U.S. at 540-46. It

was these principles that the Seventh Circuit applied to find that

Serfecz had not established that: (1) he had suffered antitrust

injury; and (2) in light of the remoteness of his injury, he was

otherwise a proper plaintiff to maintain this antitrust action.

(Seventh Circuit Opinion at 7-12, Respondents’ Appendix pp.

7a-13a).

B. Serfecz Has Not Suffered Antitrust Injury.

Applying the principles set forth in Associated General

Contractors and Brunswick, the Seventh Circuit correctly found

that Serfecz, the owner of a retail shopping mall, did not have

standing to assert a cause of action for antitrust violations

allegedly committed by a grocery store tenant; violations which

allegedly had their focus and impact in the retail grocery market.

Although Serfecz claims to have been harmed by Jewel's failure

to sublease its Grove Mall space to another grocer, a private

antitrust plaintiff does not acquire standing merely by showing

that defendant’s conduct injured him.‘ In addition to establishing

a link between the defendant’s acts and the plaintiff’s injuries,

this Court has held that:

Plaintiffs must prove antitrust injury, which

is to say injury of the type the antitrust laws

were intended to prevent and flows from that

which makes defendant’s acts unlawful. The

injury should reflect the anticompetitive

4. Jewel was not required by its lease to sublease to another grocer.

effect, either of the violation or of the

anticompetitive acts made possible by the

violation. It should, in short, be “the type of

loss that the claimed violations. . . would be

likely to cause.”

Brunswick, 429 U.S. at 489.

In its opinion, the Seventh Circuit noted that this test focuses

on the “connection between the purpose of the antitrust laws

(protecting market competition) and the alleged injury” and

explained that

[w)hen the plaintiff’s injury is linked to the

injury inflicted upon the market, such as

when customers pay higher prices because of

a market monopoly or when a competitor is

forced out of the market, the compensation of

the injured party promotes the designated

purpose of the antitrust laws — the

preservation of competition.

(Seventh Circuit Opinion at 8, Respondents’ Appendix p. 9a).

The Seventh Circuit reasoned that if Jewel’s goal was to gain

control of the retail grocery market in Elk Grove Village, Illinois,

the damages claimed by plaintiffs (devaluation of Grove Mall)

did not present the type of anticompetitive injury that the

antitrust laws were intended to remedy. (Seventh Circuit

Opinion at 10, Respondents’ Appendix p. 11a).

In reaching this conclusion the Seventh Circuit examined

the plaintiff’s status vis-a-vis the relevant market. (Seventh

Circuit Opinion at 8-9, Respondents’ Appendix pp. 8a-10a). The

court described Serfecz as a “supplier” to the retail grocery

market and noted that suppliers to direct market participants

typically cannot seek recovery under the antitrust laws because

their injuries are too secondary and indirect to be considered

“antitrust injuries.” (Seventh Circuit Opinion at 8, Respondents F

Appendix at 9a). (citing Southwest Suburban Bd. of Realtors,

Inc. v. Beverly Area Planning Ass'n, 830 F.2d 1374, 1379 (7th

Cir. 1987)).° Contrary to Serfecz’ argument that the Seventh

Circuit's analysis of his status in the market is inappropriate, this

Court’s standing precedent calls for just such an evaluation.°

The Seventh Circuit’s holding that Serfecz did not suffer

antitrust injury is consistent with decisions of other courts faced

with facts virtually identical to those in this case. For instance, in

South Haven Land Co. v. Malone and Hyde, Inc., 715 F.2d 1079

5. Suppliers consistently have been denied standing to challenge

antitrust violations occurring in a market other than the market in which they

compete. See Bodie-Rickett & Assocs. v. Mars, Inc., 957 F.2d 287, 290-291

(6th Cir. 1992) (broker of snacks and candies lacked standing to bring antitrust

action against product manufacturer); /nternational Raw Materials, Lid. v.

Stauffer Chem. Co., 978 F.2d 1318 (3d Cir. 1992), cert. denied, 113S.Ct. 1588

(1993) (storage facility operator lacked standing to bring antitrust action

against soda ash producer); Adams v. Pan American World Airlines, Inc.,828

F.2d 24 (D.C. Cir. 1987), cert. denied, 485 U.S. 934 (1988). As a result,

landlords typically have been denied standing to assert an antitrust claim for

a violation occurring in a tenant's market. R.C. Dick Geothermal Corp. v.

Thermogenics, 890 F.2d 139 (9th Cir. 1989); Melrose Realty Co. v. Loew's, 234

F.2d $18 (3d Cir.), cert. denied, 352 U.S. 890 (1956); Harrison v. Paramount

Pictures, 115 F. Supp. 312(E.D. Pa. 1953), aff'd per curiam, 211 F.2d 405 (34

Cir), cert. denied, 348 U.S. 828 (1954).

6. Neither is the Seventh Circuit's opinion a rejuvenation of the “target

area” approach to standing. Nonetheless, to the extent the “target area”

approach embodied the concept that a plaintiff whose injury which was

indirectly or remotely related to the antitrust violation was not an appropriate

plaintiff to bring a treble damage claim, that concept survives in the Supreme

Court's current precedent and was considered by the Seventh Circuit in this

case. (Seventh Circuit Opinion at 8-10, Respondents’ Appendix pp. 9a-11a).

(6th Cir. 1983), the Sixth Circuit held that an owner-lessor of

retail commercial space did not have standing to maintain an

antitrust action against a grocery store retailer who did not

release its rental space to allow the plaintiff to lease the space to

a different grocery store. The Sixth Circuit held that the

plaintiff's injury (rental devaluation) as a supplier of retail space

to direct participants in the retail grocery market was not

“sufficiently linked to the procompetitive policy of the antitrust

laws.” South Haven, 715 F.2d at 1087. Like the Seventh Circuit

in this case, the Sixth Circuit in South Haven cited Rosenberg v.

Cleary, Gottlieb, Steen & Hamilton, 598 F. Supp. 642 (S.D.N.Y.

1984), which held that the owner of a shopping mall alleging a

conspiracy designed to keep him from opening a grocery store in

his mall lacked standing because the owner was not a direct

participant in the retail grocery market.

Finally, Serfecz’ discussion of several cases, which purport

to grant antitrust standing to suppliers like Serfecz, misconstrues

those opinions. For example, acareful reading of Blue Shield of

Virginia v. McCready, 457 U.S. 465 (1982), the case which

serves as the springboard for Serfecz’ argument, reveals that the

case undermines Serfecz’ position. There, a subscriber to Blue

Shield’s health care plan complained when Blue Shield refused

to reimburse its insureds for psychotherapy services performed

by psychologists as opposed to psychiatrists. The Court

conferred standing on the plaintiff because her injury was

inextricably intertwined with the injury to the psychotherapy

market. McCready, 457 U.S. at 485. The plaintiff in McCready

was a consumer of psychotherapy services performed by

psychologists and, as such, was a classic antitrust plaintiff.

AmericanAgric. Movement v. Board of Trade, 848 F. Supp. 814,

824 (N.D. Ill. 1994). As a consequence, the harm she sustained

— whether it was a reduction of service provider choice or higher

prices resulting either from a lack of reimbursement or the

psychiatrist’s ability toraise service fees — was classic antitrust

injury.

Similarly, in /n re Lower Lake Erie Iron Ore Antitrust Litig.,

998 F.2d 1144 (3rd Cir. 1993), the plaintiff steel company sued

the defendant railroads for restraining competition in the

unloading and transportation of iron ore. The steel company sued

for damages for excessive transport charges caused by the

railroad’s anticompetitive behavior because, as acustomer, they

were directly affected by the increase in transport charges. The

remaining cases cited by petitioners — Ostrofe v. H.S. Crocker

Co., 740 F.2d 739 (9th Cir. 1984), Ashmore v. Northeast

Petroleum Div. of Cargill, Inc., 843 F. Supp. 759 (D.Me. 1994),

and Donahue v. Pendleton Woolen Mills, Inc. ,633 F. Supp. 1423

(S.D.N.Y. 1986) — are inapplicable to the case before the Court

because all three involved employees who were forced to be part

of the anticompetitive scheme devised by their employers.

C. Serfecz is Not An Appropriate “Private Attorney

General.”

The Seventh Circuit also denied Serfecz’ standing based

upon another factor cited in Associated General Contractors.

The Court of Appeals ruled that even if Serfecz could establish

antitrust injury, “only those parties who can most efficiently

vindicate the purposes of the antitrust laws have antitrust

standing to maintain a private action under Section 4.”’ (Seventh

Circuit Opinion at 10, Respondents’ Appendix p. 11a). (citing In

7. The complaint in this case seeks relief only for Jewel's allegedly

anticompetitive conduct directed against Serfecz’ retail shopping center.

Nevertheless, Serfecz suggests that Jewel's conduct in Elk Grove Village is

part of a state-wide scheme to stifle competition and that, unless Serfecz is

allowed to maintain this action, Jewel will never be held accountable for its

allegedly unlawful conduct. Although Jewel contests the admissibility of the

evidence on which this argument is based, the Seventh Circuit considered and

rejected this claim in the context of Serfecz’ antitrust claim relating to the retail

shopping center market. (Seventh Circuit Opinion at 17-18, Respondents’

Appendix pp. 19a-20a). Allegations about Jewel’s conduct that is unrelated to

Serfecz’ alleged injury in this case is irrelevant to the question whether Serfecz

has standing to maintain his action against Jewel.

Re Industrial Gas Antitrust Litig., 681 F.2d at 516). “The

existence of an identifiable class of persons whose self interest

would normally motivate them to vindicate the public interest

and antitrust enforcement diminishes the justification for

allowing a more remote party . . . to perform the office of a

private attorney general ... [particularly when denying

standing) itis not likely to leave a significant antitrust violation

undetected or unremedied.” Associated General Contractors,

459 U.S. at 542.

The Seventh Circuit recognized that if competing grocery

stores had been precluded from the market and injured by Jewel's

actions, their injuries would be direct and they could maintain an

antitrust action against Jewel. Similarly, grocery consumers

could maintain an action if Jewel's actions stifle competition and

allow Jewel to engage in monopoly pricing in the retail grocery

market. (Seventh Circuit Opinion at 10-11, Respondents’

Appendix pp. 1 la-12a).

In this case, there are both more direct victims of the alleged

antitrust violation and victims with resources sufficient to

pursue an antitrust action. To grant Serfecz standing to sue would

not enhance enforcement of the antitrust laws; rather it would

open the door to plaintiffs increasingly further removed from the

gravamen of the alleged antitrust violation. The standing

analysis developed by this Court was intended to prevent this

result. See Alpha Shoe Serv. v. Fleming Cos., 849 F.2d 352 (8th

Cir. 1988), cert. denied, 488 U.S. 942 (1988) (court rejected suit

by shopping center tenants against grocery store anchor who

vacated its space for extended period of time because plaintiffs

were not competitors, participants, or consumers in the relevant

market).

8 > ee

ee a ane

arate. alee Jey temtntie a 3

CONCLUSION

The Seventh Circuit's analysis of Serfecz’ standing [to

maintain this antitrust action adheres to this Court's well-

established precedent and is consistent with the decisions

rendered by courts in other circuits in factually comparable

cases. Serfecz has presented no legitimate basis for this Court to

review the issue raised in this case or the lower courts’

disposition of it. Jewel therefore requests that this Court deny

Serfecz’ Petition.

Respectfully submitted,

DAVID MARX, JR.

Counsel of Record

ANNE PRAMAGGIORE

McDERMOTT, WILL & EMERY

Attorneys for Respondents

227 West Monroe Street

Chicago, Illinois 60606

(312) 372-2000

te ee a

’ la

APPENDIX A— OPINION OF THE UNITED STATES

COURT OF APPEALS FOR THE SEVENTH CIRCUIT

DECIDED SEPTEMBER 26, 1995

In the

United States Court of Appeals

For the Seventh Circuit

Nos. 94-3211, 94-4017, 95-1201

; JOSEPH SERFECZ and

FIRST CHICAGO TRUST,

ea ee eee ee ee Tee he ihe Sal ABT der

. Plaintiffs-Appellants,

: v.

JEWEL FOOD STORES, etal.,

Defendants-Appellees.

United States District Court for the

: Northern District of Illinois, Eastern Division.

| No. 92 C 4171—John F. Grady, Judge.

ARGUED MAY 11, 1995—-DECIDED SEPTEMBER 26, 1995

. Before CUDAHY. ESCHBACH and RIPPLE, Circuit

Judges.

RIPPLE, Circuit Judge. Joseph Serfecz and First Chicago

Trust Company of Illinois (“First Chicago Trust”) have

ownership interests in the Grove Mall in Elk Grove Village,

Illinois. They claim that Jewel Food Stores (“Jewel”), American

Appendix A

Stores Properties, Inc. (“American Properties”), and the

developers of competing Elk Crossing Mall have conspired to

run Grove Mall out of business and to monopolize the retail

grocery and shopping center markets in Elk Grove Village. They

brought this action alleging defendants violated the Sherman

Act, 15 U.S.C. §§ 1,2. They also alleged supplemental state law

claims of malicious prosecution and breach of lease. The district

court granted the defendants’ motions for summary judgment

with regard to the antitrust and malicious prosecution claims and

granted a partial summary judgment with regard to the breach of

lease claim. Mr. Serfecz and First Chicago Trust now appeal that

judgment.' For the reasons set forth below, we affirm the

judgment of the district court.

BACKGROUND

A. Facts

In 1963, Jewel entered into a lease for retail space in Grove

Mall. Jewel’s lease ran until 1986 and provided Jewel with three

five-year options to renew. In 1977, Mr. Serfecz purchased

Grove Mall and assumed all existing leases including the Jewel

lease. In 1986, Jewel exercised its first option to renew and in

1991 itexercised its second option. Jewel’s current lease expires

1. The district court had jurisdiction of Counts I and II under 15 U.S.C. § 26

and 28 U.S.C. § 1337. The district court had supplemental jurisdiction over Counts

Ill and IV under 28 U.S.C. § 1367(a). On January 10, 1995, the district court granted

defendants’ motion for summary judgment on Counts I, II, III and part of [V. The

court did not grant summary judgment as to the portion of Count IV claiming breach

of lease due to an unlawful use of the premises. Pursuant to Federal Rule of Civil

Procedure 54(b), the district court determined that there was no reason to delay entry

of final judgment in favor of defendants on all claims except the unlawful use claim

in Count IV or to delay appeal from that judgment.

Appendix A

in 1996 and, based upon the remaining five-year option, may be

extended until 2001.

From 1963 until 1987, Jewel owned and operated a grocery

store in its leased premises at Grove Mall. In October 1987,

Jewel vacated the premises and moved its grocery operation

across the street to the newly constructed Elk Crossing Mall.

Since its move, Jewel has continued to pay rent and has exercised

its second option to renew the lease. Jewel has refused to give up

its leasehold interest in the premises and its retail space has

remained unoccupied. Jewel proposed to sublet the space to

United Skates of America (“United Skates”) for use as aroller

skating rink. Mr. Serfecz objected to this proposed sublease

because he believed occupancy by United Skates would ruin

Grove Mall as aretail center and increase his insurance liability.

In 1990, Jewel filed an action in state court that sought a

declaratory judgment regarding its right to sublet. The Illinois

trial court ruled against Jewel; it held that the express provisions

of the lease gave Mr. Serfecz the right to refuse any sublet that

would increase his insurance rates. The appellate court affirmed.

Mr. Serfecz, joined by First Chicago Trust,” brought this

action against Jewel, American Properties,’ United States,*and

the developers and operators of the Elk Crossing Mall.* That

2. First Chicago Trust Company of Illinois, Trustee of Trust No. 684 is the

title holder of Grove Mall. Joseph Serfecz is the beneficial owner of the trust.

3. American Properties, Inc. is the company that manages properties

owned and rented by Jewel.

4. United Skates of America, Inc. is an Ohio Corporation that operates

rolier skating rinks and is licensed and doing business in Illinois.

5. The complaint lists five defendants connected with the development of

(Cont'd)

Appendix A

complaint claimed that the defendants conspired to devalue and

to destroy Grove Mall in order to eliminate competition in the

retail grocery and shopping center markets. The plaintiffs

contend that the defendants conspired to keep the Jewel rental

space empty, to prevent a major anchor tenant from taking over

Jewel’s rental space, to obstruct Mr. Serfecz’s attempt to

redevelop Grove Mall, and tocoerce Grove Mall tenants to leave

and move across the street to Elk Grove Mall. The plaintiffs

maintain that the alleged conspiracy is part of an overall

marketing strategy of restricting the use of property in order to

keep out competitors and to restrain trade. In Counts I and II of

their complaint, plaintiffs alleged defendants violated § 1 and

§ 2 of the Sherman Act, 15 U.S.C. §§ 1,2. In Count III plaintiffs

allege Jewel’s declaratory judgment action regarding the United

Skates sublet was malicious prosecution and in Count IV allege

breach of lease by Jewel.

B. The Antitrust Laws: The Relevant Statutory Provisions

Section One of the Sherman Act prohibits anticompetitive

activities designed to restrain unreasonably trade and bans

“[e]very contract, combination in the form of trust or otherwise,

or conspiracy, in restraint of trade orcommerce. .. .” 15 U.S.C.

§ 1. Section Two prohibits monopolistic practices and provides

sanctions for “[e]very person who shall monopolize, or attempt

(Cont'd)

Elk Crossing Mall: Patrick F. Daly and Associates, Inc., the architect for Elk

Crossing Mall; D.E.L., Inc., the contract purchaser of the land on which the Elk

Crossing Mall was built; Dalan/Jupiter, Inc., adeveloper of Elk Crossing Mall;

Mid-America Real Estate Corporation, the leasing agent for Dalan/Jupiter, Inc.

and Elk Crossing Mall; and Patrick F. Daly, an officer, director, and shareholder

of Patrick F. Daly and Associates, Inc., D.E.1., Inc., and Dalan/Jupiter, Inc., and

owner of a limited partnership interest in Elk Crossing Mall.

Appendix A

to monopolize, or combine or conspire with any other person or

persons, to monopolize any part of the trade or commerce. . . .”

15 U.S.C. § 2.

Section Four of the Clayton Act defines the class of persons

who may bring a private suit under the antitrust laws. Section

Four provides:

[A]ny person who shall be injured in his

business or property by reason of anything

forbidden in the antitrust laws may sue

therefor in any district court of the United

States in the district in which the defendant

resides or is found or has an agent, without

respect to the amount in controversy, and

shall recover threefold the damages by him

sustained and the cost of suit, including a

reasonable attorney’s fee.

15 U.S.C. § 15. The Supreme Court has held that “Congress did

not intend the antitrust laws to provide a remedy in damages for

all injuries that might conceivably be traced to an antitrust

violation.” Hawaii v. Standard Oil Co., 405 U.S. 251, 263 n.14

(1972). The language of § 4 has been construed to limit the

parties who may bring an antitrust action to (1) those who have

suffered the type of injury that the antitrust laws were intended

to prevent and (2) those whose injuries are a result of defendant's

unlawful conduct. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc.,

429 U.S. 477, 489 (1977). The Court, focusing on Congress’

intent to have antitrust laws construed in light of the common

law, also has read § 4 to contain a proximate cause element,

denying standing to plaintiffs whose injuries are indirect or

secondary. Associated Gen. Contractors, Inc. v. California State

Appendix A

Council of Carpenters; 459 U.S.519, 540-46 (1983). The Court

has identified several factors to be considered in determining

whether a plaintiff is the proper party to bring a private action

under the antitrust laws: (1) the causal connection between the

antitrust violation and the plaintiff's injury; (2) the nature of the

plaintiff’s injury and the relationship between the plaintiff's

injury and the type of activity sought to be redressed under the

antitrust laws; and (3) the speculative nature of the plaintiff’s

claim for damages and the potential for duplicative recovery or

complex apportionment of damages. Associated Gen.

Contractors, 459 U.S. at 537-46; see also Nelson v. Monroe

Regional Medical Ctr., 925 F.2d 1555, 1562 (7th Cir.), cert.

dismissed, 502 U.S. 903 (1991).

C. The District Court Proceedings

The district court granted the defendants’ motion for

summary judgment on the antitrust claims. With respect to the

monopolization of the retail grocery market claim, the court held

that the plaintiffs lacked antitrust standing. The court held that

the plaintiffs had presented enough evidence for a trier of fact to

find that Jewel acted deliberately to prevent a competitor from

occupying Jewel’s rental space and to find a causal connection

between the absence of a grocery store anchor tenant and the

demise of Grove Mall. The court concluded that plaintiffs’ injury

was, nevertheless, too indirect toconfer standing with respect to

the retail grocery market. With respect to the retail shopping

center market, the court determined that the plaintiffs had

standing, but that they had failed to establish a genuine issue of

triable fact as to the existence of the conspiracy among the

defendants to restrain trade and to monopolize sales and

development in this market.

Appendix A

The district court also granted defendants’ motion for

summary judgment on the malicious prosecution claim. It held

that plaintiffs had failed to allege a special injury. The court

additionally granted defendants’ motion for summary judgment

on the breach of lease claim insofar as the plaintiffs’ claim was

based upon Jewel’s failure to continue operating as a grocery

store at Grove Mall. The court denied the defendants’ motion to

the extent that the plaintiffs’ claim was based upon the illegal use

provision of the lease. It determined that the broad non-

restrictive wording of the illegal use provision prohibited using

the premises to violate the antitrust laws. The court reasoned

that, although the plaintiffs lacked antitrust standing to recover

damages for the monopolization of the grocery market, they did

have standing, as parties to the lease, to sue for breach of the lease

provision relating to violations of the law, arguably including

violation of § 2 of the Sherman Act. In the district court’s view,

“use of the leased premises in furtherance of a Section 2 antitrust

violation could indeed constitute a breach of the lease.” Mem.

Op. at 38. As we have noted earlier, supra n.1, this issue is not

before us today.

DISCUSSION

We review de novo the district court’s grant of summary

judgment. We evaluate the evidence in a light most favorable to

the nonmeoving party. Greater Rockford Energy & Technology

Corp. v. Shell Oil Co., 998 F.2d 391, 394 (7th Cir. 1993), cert.

denied, 114 S. Ct. 1054 (1994). Summary judgment is

appropriate when the pleadings and supplemental materials

present no genuine issue of material fact and the moving party is

entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c);

Celotex Corp. v. Catrett, 477 U.S. 317 (1986). To survive a

Appendix A

defendant’s motion for summary judgment, a plaintiff must

present sufficient evidence to show the existence of each element

of its case on which it will bear the burden at trial. Matsushita

Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S 574 585-86

(1986); Greater Rockford Energy & Technology Cor.,998 F.2d

at 394.

A. The Antitrust Claims

The Sherman Act was enacted “to assure customers the

benefits of price competition, and . . . protect[ ] the economic

freedom of participants in the relevant market.” Associated Gen.

Contractors, 459 U.S. at 538; see Sanner v. Board of Trade, Nos.

94-2139, 94-2152, slip op. at 15 (7th Cir. Aug. 7, 1995). In this

case, there are two relevant markets—the retail grocery market

and the retail shopping center market. In order to maintain an

antitrust action, plaintiffs must establish that they (1) have

suffered an antitrust injury and (2) are the proper plaintiffs to

maintain an antitrust action with respect toeach of these markets.

See Local Beauty Supply, Inc. v. Lamaur Inc., 787 F.2d 1197,

1202 (7th Cir. 1986); In re Industrial Gas Antitrust Litig., 681

F.2d514,515 (7th Cir. 1982), cert. denied, 460 U.S. 1016(1983).

1. The Retail Grocery Market

The district court determined that plaintiffs had presented

enough evidence to permit a trier of fact to conclude that

defendants had acted deliberately to prevent acompetitor from

occupying Jewel’s rental space and that the absence of a grocery

store anchor tenant was a significant cause of Grove Mall’s

decline. A private antitrust plaintiff, however, does not acquire

standing merely by showing that he was injured by the

defendant’s conduct. In addition to establishing a link between

Appendix A

the defendant’s acts and the plaintiff’s injuries, the Supreme

Court has held that:

Plaintiffs must prove antitrust injury, which

is to say injury of the type the antitrust laws

were intended to prevent and that flows from

that which makes defendants’ acts unlawful.

The injury should reflect the anticompetitive

effect either of the violation or of

anticompetitive acts made possible by the

violation. It should, in short, be “the type of

loss that the claimed violations. . . would be

likely to cause.”

Brunswick Corp., 429 U.S. at 489 (citations omitted). This test

focuses on the connection between the purpose of the antitrust

laws (protecting market competition) and the alleged injury.

When the plaintiff’s injury is linked to the injury inflicted upon

the market, such as when consumers pay higher prices because

of a market monopoly or when a competitor is forced out of the

market, the compensation of the injured party promotes the

designated purpose of the antitrust law—the preservation of

competition.

It is not contested that Mr. Serfecz brings this action neither

as a consumer nor as a competitor in the retail grocery market,

but as a lessor of rental space to competitors in this market.

Suppliers to direct market participants typically cannot seek

recovery under the antitrust laws because their injuries are too

secondary and indirect to be considered “antitrust injuries.”

Southwest Suburban Bd. of Realtors, Inc. v. Beverly Area

Planning Ass'n, 830 F.2d 1374, 1379 (7th Cir. 1987); see also

Stamatakis Indus. v. King, 965 F.2d 469, 471 (7th Cir. 1992)

10a

Appendix A

(“[A] producer’s loss is no concern of the antitrust laws, which

protect consumers from suppliers rather than suppliers from

each other.”); Bodie-Rickett & Assocs. v. Mars, Inc., 957 F.2d

287, 290-91 (6th Cir. 1992) (holding that injury to broker

through loss of commission was not “antitrust injury”). In

Southwest Suburban, a trade association that provided listing

services to real estate brokerage firms alleged that the

defendants conspired to boycott, and encouraged customers to

boycott, the plaintiff’s listing service. Consequently, the trade

association was unable to provide a comprehensive listing of

properties to its subscribers. The defendants allegedly had taken

action directly against the trade association to reduce the value

of its listing in order to exclude non-preferred brokers from the

real estate brokerage services market. The court held, however,

that the defendants’ anti-competitive practice was directed at the

members of the trade association, not the trade association itself,

and that any injury to the trade association, as a supplier of listing

services, was too remote from the antitrust violation to confer

standing. Southwest Suburban, 830 F.2d at 1379. We believe that

the plaintiffs are in a similar position to that trade association and

are best characterized as suppliers to the market participants,

retail grocery stores and grocery purchasers.

In Southaven Land Co. v. Malone & Hyde, Inc., 715 F.2d

1079 (6th Cir. 1983), our colleagues in the Sixth Circuit held that

an owner-lessor of retail commercial space did not have standing

to maintain an antitrust action against a grocery store retailer

who would not release its rental space to allow the plaintiff to

lease the space toa different grocery store. The plaintiff claimed

that the defendants intended to monopolize the retail grocery

market by destroying the site as a location for the operation of a

retail grocery outlet. The Sixth Circuit held that the plaintiff's

injury (rental devaluation) as a supplier of retail space to direct

lla

Appendix A

participants in the retail grocery market was not “sufficiently

linked to the pro-competitive policy of the antitrust laws.”

Southaven, 715 F.2d at 1087; see also Rosenberg v. Cleary,

Gottlieb, Steen & Hamilton, 598 F. Supp. 642 (S.D.N.Y. 1984)

(holding that owner and developer of shopping mall alleging

defendants conspired to keep it from opening a grocery store by

filing state court lawsuits and preventing building permits from

being issued lacked standing because developer was nota direct

participant in the retail grocery market).

Here, the plaintiffs’ injury is not the direct effect of the

defendants’ anticompetitive conduct. Assuming Jewel’s goal

was to gain control of the retail grocery market in Elk Grove,

Illinois, we do not believe that the damages claimed by plaintiffs

(devaluation of Grove Mall) present the type of anticompetitive

injury that the antitrust laws were intended to remedy. See

Sanner, Nos. 94-2139, 94-2152, slip op. at 14-15 (7th Cir. Aug.

7, 1995).

Even if plaintiffs’ injury could be characterized as an

antitrust injury, this factor alone would not confer standing:

“From the class of injured persons suffering an ‘antitrust injury’

only those parties who can most efficiently vindicate the

purposes of the antitrust laws have antitrust standing to maintain

a private action under § 4.” Jn re Industrial Gas Antitrust Litig.,

681 F.2d at 516. “The existence of an identifiable class of persons

whose self-interest would normally motivate them to vindicate

the public interest in antitrust enforcement diminishes the

justification for allowing amore remote party . . .to perform the

office of a private attorney general ... [particularly when

denying standing] is not likely to leave a significant antitrust

violation undetected or unremedied.” Associated Gen.

Contractors, 459 U.S. at 542. Our decisions have recognized the

12a

Appendix A

need to balance the interests of deterrence through private

antitrust enforcement and avoidance of excessive treble

damages litigation. “An appropriate balance is achieved by

granting standing only to those who, as consumers or

competitors, suffer immediate injuries with respect to their

business or property, while excluding persons whose injuries

were more indirectly caused by the antitrust conduct.” Jn re

Industrial Gas Antitrust Litig.,681 F.2d at 520. If the competing

grocery stores have been precluded from the market and injured

by defendants’ actions, their injuries would be direct and they

could maintain an antitrust action against the defendants. See

Southwest Suburban, 830 F.2d at 1379-80; Southaven, 715 F.2d

at 1086-87; In re Industrial Gas Antitrust Litig.,681 F.2d at 520.

Similarly, grocery consumers could maintain an action if

defendants’ actions stifled competition allowing defendants to

engage in monopoly pricing in the retail grocery market.°

Suppliers of rental space to grocery retailers are not the proper

parties to maintain an antitrust action with respect to the

defendants’ alleged monopolistic and anticompetitive activities

in the retail grocery market.’ In sum, we hold that these plaintiffs

6. See Nelson v. Monroe Regional Medical Ctr.,925 F.2d 1555, 1563-65

(7th Cir.), cert. dismissed, 502 U.S. 903 (1991) (holding that patients who were

denied medical treatment on non-emergency basis had standing to bring

antitrust action against medical center); Ball Memorial Hosp., Inc. v. Mutual

Hosp., Inc., 784 F.2d 1325, 1334 (7th Cir. 1986) (“When the plaintiff is a poor

champion of consumers, a court must be especially careful not to grant relief that

may undercut the proper functions of antitrust.”); see also [I Phillip E. Areeda &

Herbert Hovenkamp, Antitrust Law, { 1370 at p. 253 (Rev. ed. 1995) (“Because

protecting consumers from monopoly pricing is the central concern of antitrust,

buyers have usually been preferred plaintiffs in private antitrust litigation. Asa

result, consumer standing to recover for an overcharge paid directly to an illegal

cartel or monopoly is seldom doubted.”).

7. See Southwest Suburban, 830 F.2d at 1379-80; Southaven, 715 F.2d at

1086-87; In re Industrial Gas Antitrust Litig., 681 F.2d at 520; see also

(Cont'd)

13a

Appendix A

do not have the requisite direct injury to have standing to assert

that Jewel has monopolized, or conspired with others to

monopolize, the retail grocery market. We express no opinion on

whether, in a suit brought by another plaintiff who can show the

requisite direct injury, such allegations could be established.

2. Retail Shopping Center Market

The plaintiffs’ antitrust allegations are not limited to the

retail grocery market. They also allege that the defendants had

conspired to restrain trade and to monopolize sales in the retail

shopping center market. Here, the district court quite correctly

(Cont'd)

International Raw Materials, Ltd. v. Stauffer Chem. Co., 978 F.2d 1318, 1329

(3d Cir. 1992) (holding that operator of storage facility who was neither a

consumer nor producer of soda ash lacked standing to bring antitrust action

against producers of soda ash where direct participants in market would be

better plaintiffs), cert. denied, 113 S.Ct. 1588 (1993); Bodie-Rickett & Assocs.

v. Mars, Inc., 957 F.2d 287, 290-91 (6th Cir. 1992) (concluding that broker of

snacks and candies lacked standing to bring an antitrust action against snack and

candy manufacturer where targets of alleged conspiracy, competing

manufacturers and wholesale customers, were more direct victims); 5.D.

Collectibles, Inc. v. Plough, Inc., 952 F.2d 211, 213-14 (8th Cir. 1991)

(determining that broker who solicited orders for resale of product and was not a

consumer or competing manufacturer or distributor lacked standing to bring

antitrust action against manufacturers and distributor of product), Peck v.

General Motors Corp., 894 F.2d 844, 847-48 (6th Cir. 1990) (holding that

owners and officers of automobile dealership who were neither consumers nor

competitors in automobile market lacked standing to bring antitrust action

against automobile manufacturer); Henke Enters v. Hy-Vee Food Stores, Inc.,

749 F.2d 488, 489-90 (8th Cir. 1984) (concluding that owner of hardware store

in shopping center lacked standing to bring antitrust action against owner of

grocery store who anchored mall and upon vacating mall prohibited assignee

from leasing property to another grocery store because hardware store was

neither competitor nor consumer in the retail grocery market).

l4a

Appendix A

determined that the plaintiffs, who are direct participants in this

market, alleged an injury that is sufficiently direct to give them

standing.

Section One of the Sherman Act prohibits the formation of

any “contract, combination or conspiracy in restraint of trade or

commerce... .” 15 U.S.C. § 1. Toestablish a violation of § 1 of

the Sherman Act, plaintiffs must provide, therefore, evidence

that “tends to exclude the possibility of independent action by

the [defendants].” Monsanto Co. v. Spray-Rite Serv. Corp., 465

U.S. 752, 768 (1984). When a plaintiff relies on circumstantial

evidence, as is very often the case, he “must show that the

inference of conspiracy is reasonable in light of the competing

inference[ ] of independent action.” Matsushita, 475 U.S. at 588;

see Eastman Kodak Co. v. Image Technical Servs., Inc.,504 U.S.

451,468 (1992). Because there is often only a fine line separating

unlawful concerted action from legitimate business practices,

“{cJonduct [that is] as consistent with permissible competition

as with illegal conspiracy does not, standing alone, support an

inference of antitrust conspiracy.” Jd. at 588. In Market Force,

Inc. v. Wauwatosa Realty Co., 906 F.2d 1167 (7th Cir. 1990), we

set forth our approach to evaluating the legal sufficiency of the

evidence in antitrust conspiracy cases. We first review the

evidence of conspiracy submitted by the plaintiff. Next, we

examine whether the defendants have offered evidence that

tends to show that the conduct which forms the basis of the

plaintiff’s complaint is as compatible with the legitimate

business activities of the plaintiff as it is with illegal conspiracy.

Finally, if we determine that this analysis leaves the evidence of

conspiracy ambiguous, we determine whether the plaintiff can

point to any evidence that tends to exclude the possibility that the

defendants were pursuing their legitimate independent interests.

Id. at 1171-72.

15a

Appendix A

Plaintiffs submit that Jewel and the Elk Crossing defendants

engaged in aconspiracy to restrain trade in the retail shopping

center market. They point out that both Jewel and the Elk

Crossing defendants had a compelling motive to eliminate

Grove Mall as acompetitor. They also note that the Elk Crossing

defendants built E!k Crossing without investigating the

possibility that Grove Mall would be redeveloped and emerge as

a competitor. They further point out that Jewel and the Elk

Crossing defendants have built other shopping centers with

Jewel as an anchor tenant, where Jewel obtained restrictions

precluding the use of its old leasehold location as either a retail

food store or a drug store.

Plaintiffs submit that defendants conspired to have Jewel

anchor Elk Crossing while preventing a major anchor tenant

from taking over Jewel’s rental space in order to block Mr.

Serfecz’s attempt to redevelop Grove Mall. The anticompetitive

conduct about which the plaintiffs complain involves two

separate activities — Jewel’s move to Elk Crossing and Jewel's

attempted sublease to United Skates and refusal to relinquish its

leasehold interest. The defendants have provided evidence

showing that Jewel’s move to Elk Crossing is compatible with

their legitimate business interests. Jewel argues that its move to

Elk Crossing was based upon legitimate business concerns; Elk

Crossing offered Jewel anew, updated, and larger space and the

ability to open a companion Osco drugstore; Jewel could not

operate a drugstore in Grove Mall because Walgreens possessed

the exclusive right to operate a drugstore at Grove Mall. The Elk

Crossing defendants argue that their interest in Jewel is based

upon the desirability of Jewel/Osco as an anchor tenant for a

neighborhood shopping center. Elk Crossing and Jewel therefore

have proffered legitimate business reasons for Jewel’s decision

to move to Elk Crossing and for Elk Crossing’s desire to have

Jewel as a tenant.

16a

Appendix A

Jewel’s actions relating to its Grove Mall lease are more

problematic. The plaintiffs argue that Jewel attempted to sublet

to United Skates in order to destroy Grove Mall as a retail

shopping center because a roller rink anchor tenant is

inconsistent with that use. The plaintiffs contend that Jewel,

knowing that the lease prohibited subleases that would increase

insurance rates absent the owner’s consent, initiated the state

declaratory judgment action in order to discourage potential

retailers interested in subleasing the space and to tie up the

plaintiffs in litigation. Jewel counters that its attempted sublease

to United Skates was based on its desire to earn rent on the vacant

space; it makes no argument, however, with regard to the

continued payment of rent for the vacant space. Moreover,

Jewel’s explanation does not offer any legitimate business

justification for its failure to minimize its rental payments on

vacant space by accepting Mr. Serfecz’s offer to pay United

Skates rent or to release Jewel from the lease. Although this lack

of explanation on Jewel’s part may evidence an anticompetitive

motivation on its part, it does not permit, by itself, an inference

of a conspiracy on the part of Jewel with the owners of Elk

Crossing. Absent some showing that Jewel has held onto its lease

with Grove Mall because of an agreement with the Elk Crossing

defendants, we cannot say that the record supports a violation of

§ 1 of the Sherman Act. We therefore turn to the remainder of the

plaintiffs’ contentions in order to determine if they have

demonstrated that the record raises a genuine issue of triable fact

as to an agreement between Jewel and Elk Crossing.

We turn first to the evidence of motive. The plaintiffs argue

that Jewel and the Elk Crossing defendants both had a

compelling motive to destroy Grove Mall as a viable competitor.

According to plaintiffs, the value of Elk Crossing is inflated

because of a lack of alternate space and competitors. Therefore,

17a

Appendix A

the Elk Crossing owners have been able to charge high rental

prices, obtain a multimillion dollar mortgage and permit the Elk

Crossing partners to withdraw $7 million in excess value within

two years after the mall was completed. The lack of competition

also has permitted Jewel to reap the benefits of having a “captive

population” because itis the only retail grocery store in the area.

Both defendants certainly have a motive to pursue their

respective economic objectives free of competition from a

redeveloped Grove Mall. However, it is important to note that

proof of motive is of limited utility in this context. Although a

lack of motive may be evidence that parties did not conspire, the

presence of an economic motive is of very little probative value.

See Matsushita, 475 U.S. at596-97 (“Lack of motive bears on the

range of permissible conclusions that might be drawn from

ambiguous evidence: if petitioners had no rational economic

motive to conspire, and if their conduct is consistent with other,

equally plausible explanations, the conduct does not give rise to

an inference of conspiracy.”). The mere existence of mutual

economic advantage, by itself, does not tend to exclude the

possibility of independent, legitimate action and supplies no

basis for inferring aconspiracy. Riverview Inves., Inc. v. Ottawa

Community Improvement Corp., 899 F.2d 474, 483-84 (6th Cir.),

cert. denied, 498 U.S. 855 (1990). We agree with the district

court that the mere confluence of economic interests between the

parties does not establish, standing alone, the existence ofa

conspiracy.

The plaintiffs next argue that defendants built Elk Crossing

knowing that there would be no competition from Grove Mall.

They presented testimony that one of the key concerns of a

developer planning to build a shopping center is the presence of

current or future competition. Kenneth Leonard, a real estate

consultant, testified that he knew of no reputable,

18a

Appendix A

knowledgeable developer or chain store who did not consider the

threat of competition a most important consideration when

undertaking a development project. Neither Jewel nor the Elk

Crossing defendants have produced evidence that a market

analysis or feasibility study was conducted concerning possible

future competition.* The Elk Crossing defendants argue that they

had no incentive to do such a study or analysis and dispute the

importance of conducting such studies. The failure of the Elk

Crossing developers to take the precautionary step of

undertaking a market study is not, in our view, sufficiently

indicative in itself of an agreement to justify denial of summary

judgment. This evidence could not support a jury finding of

conspiracy between the Elk Crossing owners and Jewel. Itraises,

at best, the “metaphysical doubt” that Matsushita, 475 U.S. at

585, counsels is not sufficient to submit the issue to a jury. We

agree with the district court that the fact that the defendants

believed that Elk Crossing would be able to compete

successfully with the less modern mall across the street does not

supply a basis for inferring a conspiracy.

Plaintiffs also point to two instances in which Patrick F.

Daly and his architectural firm have engaged in “similar

conduct” with Jewel in developing other shopping centers. The

first is the Hickory Hills shopping center. In 1985, Patrick F.

Daly & Associates, Inc. was employed as the architectural firm

8. Leonard testified that the documents that the defendants produced for

review contained no information as to competition. In regard to the absence of

documents relating to competition, Leonard testified that: “It is so strange that

this one critical piece of information that everybody else in the world looks to as

being vital, that they agonize endlessly over, nobody, two of the most

sophisticated people around, supposedly didn’t even mention it. You have a

sophisticated development group and a sophisticated chain store group, smart,

very smart people, and they both like forgot, they had mental lapses.” R.221-22,

Ex.2 at 110-11.

19a

Appendix A

for the shopping center, and Mr. Daly had an ownership interest

in the development. Prior to the development of Hickory Hills,

Jewel was located across the street and when Jewel moved it

obtained a restriction on its former leasehold location. The

second instance is the Scharrington Square shopping center in

Schaumburg, Illinois. Patrick F. Daly & Associates, Inc. was

employed as the architectural firm and Mr. Daly had an

ownership interest in the development.’ Prior to the development

of Scharrington Square, Jewel had been located in a nearby

shopping center. Jewel obtained a restriction on the old leasehold

location so that the premise could not be leased to any person or

entity whose primary business was either the retail sale of food

or prescription drugs.

The plaintiffs can point to no evidence showing Daly’s

involvement with Jewel’s negotiations of the lease restrictions.

The fact that Daly’s architectural firm has worked on a number

of shopping centers that are anchored by Jewel and that Daly has

invested in these shopping centers create an inference of Daly’s

ability to attract business more than it creates an inference of a

conspiracy.

The plaintiffs describe their theory of the case in these

terms:

[T]he Elk Crossing defendants have an

ongoing relationship with Jewel. The Elk

Crossing defendants build and own new

shopping centers in locations where Jewel

9. Dalan/Jupiter, Inc. was the company responsible for the development

of the shopping center. Neither party has given aclear description of Mr. Daly’s

relationship to Dalan/Jupiter, Inc. though both admit that he was an officer,

owner, or shareholder.

20a

Appendix A

has an old store nearby. Jewel moves into the

new center and sterilizes the old location.

Appellants’ Br. at 41. Plaintiffs have failed to connect Daly’s

actions with Jewel’s actions, and neither set of actions standing

alone or in tandem, is evidence for inferring aconspiracy.

The evidence of record fails to show that, if the case were

submitted to a trier of fact, there would be sufficient evidence to

justify a judgment for the plaintiffs. Although, at the summary

judgment stage, we must evaluate the record so as to give the

nonmoving party the benefit of the doubt on all reasonable

inferences that may be drawn from that record, we are not

permitted to allow a case built on a metaphysical doubt to go to

the jury. Matsushita, 475 U.S. at586-87. Here the plaintiffs’ case

is built on a metaphysical doubt on a metaphysical doubt. There

is simply no evidence that precludes the possibility of

independent action. Jd. at 597 n.21. In this context, the absence

of that evidence deprives the plaintiffs of a reasonable case that

would support a jury verdict. Alvord-Polk, Inc. v. F. Schumacher

& Co., 37 F.3d 996, 1000-01 (3d Cir. 1994), cert. denied, 115S.

Ct. 1691 (1995); see Eastman Kodak, 504 U.S. at 468-77.

B. The Malicious Prosecution Claim

In February 1990, Mr. Serfecz learned that Jewel was

negotiating a sublease with United Skates, who wished to

operate a roller skating rink on the premises. Mr. Serfecz wrote

Jewel and explained his opposition to the sublease. He believed

that, under the terms of the lease, Jewel could not sublease

without prior written consent to any tenant whose operation

would cause an increase in insurance rates. Jewel responded by

stating that it believed that it had the right to sublet the premises

2la

Appendix A

as long as the proposed sublease was for a lawful purpose. It

offered to reimburse Mr. Serfecz for any increase in the

insurance premium. Mr. Serfecz changed the locks to the

premises and Jewel brought a declaratory judgment action

against Mr. Serfecz in state court regarding its right to sublease

to United Skates. The trial court granted Mr. Serfecz’s motion for

a directed verdict, and the Illinois appellate court affirmed.

Jewel Cos. v. Serfecz, 641 N.E.2d 22 (Ill. App. Ct. 1991). On

appeal before this court, plaintiffs maintain that the suit was

brought solely for the purpose of harassment, intimidation, and

interference with the redevelopment of Grove Mall, and they

charged Jewel with malicious prosecution.

The Illinois courts have long disfavored actions for

malicious prosecution and have sought to encourage a policy of

open access to the courts. Levin v. King, 648 N.E.2d 1108, 1110

(Ill. App. Ct. 1995); Keefe v. Aluminum Co. of Am., 519 N.E.2d

955, 956 (Ill. App. Ct. 1988). In order to establish malicious

prosecution, a claimant must show that: (1) the action was

terminated in plaintiff’s favor; (2) the action was brought

maliciously and without probable cause; and (3) the plaintiff

suffered “special injury” or special damage beyond the usual

expense, time or annoyance in defending a lawsuit. Levin, 648

N.E.2d at 1110; Keefe, 519 N.E.2d at 956. The district court

determined that the plaintiffs were able to show that the

declaratory judgment action was terminated in their favor. It also

concluded that they had provided sufficient evidence tocreate a

factual dispute as to whether the action was brought maliciously

and without probable cause. However, according to the court,

they were unable to show special injury. We agree.

Under Illinois common law, special injury is usually

“identified with an arrest or seizure of property or some

22a

Appendix A

”

constructive taking or interference with the person or property.

Levin, 648 N.E.2d at 1110. “[A] showing of interference with

property ‘is satisfied only if acourt issues a provisional remedy

such as attachment, an order of arrest or an injunction.’ ”°

Equity Assocs., Inc. v. Village of Northbrook, 524N.E.2d 1119,

1124 (Ill. App. Ct. 1988) (quoting Tedeschi v. Smith, Barney,

Harris, Upsham & Co., 548 F. Supp. 1172, 1174 (S.D.N_Y.

1982), aff'd, 757 F.2d 465 (2d Cir.), cert. denied, 474 U.S. 850

(1985)). In Illinois, the court’s focus rests upon the peculiar

effect of the suit upon plaintiff’s right to use the property; special

injury in civil cases will not be found unless the injuries emanate

directly from the impact of the issues allegedly wrongfully

litigated. Compare Bank of Lyons v. Schultz, 399 N.E.2d 1286

(Ill. 1980) (holding that injunction restraining distribution of life

insurance proceeds for more than nine years to widowed

beneficiary sufficient interference with property to satisfy

special injury requirement) and Norin v. Scheldt Mfg. Co., 130

N.E. 791 (Ill. 1921) (concluding that prosecution of involuntary

bankruptcy created basis for malicious prosecution claim

because of the unusual and far reaching impact of a bankruptcy

action on property rights) with Keefe, 519 N.E.2d at 957

(determining that public record of unsatisfied judgment and

impairment of credit rating as a result of pending litigation did

not satisfy special injury requirement). The injuries that

plaintiffs allege are lost rental payments and the devaluation and

inability to redevelop Grove Mall. These allegations of damages

are insufficient to satisfy the special injury requirement.

Allegations of loss of potential tenants, of institutional lending

10. Plaintiffs argue that the temporary restraining order issued by the trial

court created a special injury identical to the issuance of a preliminary

injunction barring a plaintiff from use of her property. We disagree. The

temporary restraining order was issued after Serfecz changed the locks and

simply gave Jewel, the legal tenant, access to and control of its leased premises.

23a

Appendix A

commitments, and of the earnings and appreciation of a building

complex are inadequate to satisfy the special injury requirement.

See Equity Assocs., Inc., 534 N.E.2d at 1122.

C. The Breach of Lease Claim

Plaintiffs also allege that Jewel has breached paragraph 28

of the lease by using the premises solely for the purpose of

keeping the anchor space dark. Paragraph 28 provides that the

“lessee shall use the leased premise only for operation of a

grocery supermarket.” The plaintiffs state that “the gist of [our]

argument concerning paragraph 28 is that Jewel is using the

premises to stifle competition and not to operate a grocery

supermarket.” Reply Br. at 21. This argument is, at best, an

extension of plaintiffs’ argument that Jewel has breached the

lease by using the premises for an unlawful purpose, a claim

which is still pending in the district court."

Paragraph 28 is a typical use-restriction provision

delineating the permissible uses of the leased premises. We do

11. Inthe district court, plaintiffs claimed that Jewel breached paragraph

| of the lease by using the premise to restrain trade and monopolize the retail

grocery business. Paragraph i of the Jewel lease provides:

Lessee shall not use the demised premise for any

unlawful purpose nor shall it commit waste. It shall

comply with all lawful requirements of the local Board

of Health, Police and Fire Departments, and state and

federal authorities, respecting the manner in which it

uses the leased premises.

R.22, Ex.7 at 1. The district court found that use of the premises in furtherance of

a § 2 antitrust violation could constitute a breach of the lease and denied

defendant's motion for summary judgment as to this claim.

24a

Appendix A

not believe paragraph 28 supports plaintiff’s claim that a use-

restriction as tothe sale of groceries restricts the defendants from

leaving the store vacant. Allowing a store to remain vacant is

different from opening a hardware or music store on the leased

premises, and we believe it is the latter and not the former that

paragraph 28 was meant to address.

Conclusion

For the foregoing reasons, the decision of the district court

is affirmed.

AFFIRMED

25a

Appendix A

CUDAHY, Circuit Judge, dissenting. This is a difficult case.

Much of the relevant case law and the various guides to standing

itcontains may be read at least superficially to support the result

reached by the majority. The alleged injury here is “indirect” in

the sense that Serfecz is not a competitor in the retail grocery

market nor, obviously, a consumer. Yet the economic reality is

that Serfecz has suffered a more calculable and a more

substantial injury from Jewel’s allegedly anti-competitive

conduct than would a plaintiff whose injuries were in theory

direct. In fact, if Serfecz’s suit fails for lack of standing, there is

not much realistic hope of anyone else’s taking up the cudgels.

This is certainly a relevant, though not necessarily dispositive,

factor in the analysis.

It is unlikely that a grocery store competitor (or here

potential competitor) of Jewel would challenge Jewel’s conduct

in retaining its hold on its abandoned store. With all the

thousands of possible locations available in the Chicago area, it

is doubtful that a competitor would undertake an expensive and

prolonged lawsuit to gain entry to one of them — and one already

subject to Jewel’s strong competition, at that. This would be true

even if, as is alleged here, Jewel played dog in the manger with

other store locations as well.

A customer would be even more unlikely to sue since her

damages would be slight and very difficult to prove. On the other

hand, Serfecz has lost his anchor tenant and been precluded from

getting another. The consequent decline in the value of his

shopping center involves not only a substantial loss but one more

easily calculable than losses to potential competitors or to

consumers. Serfecz may be in theory only a supplier to a

potential competitor but his evident loss is much more likely to

be the basis of a lawsuit than the putative loss of one “directly”

injured.

26a

Appendix A

Judge Grady, whose summary judgment decision we review

here, expressed doubt and frustration about the result to which he

felt driven by the cases. He expressed the view that competitors

of Jewel or its consumers would not in fact be in a position to

challenge the alleged anti-competitive conduct here. Judge

Grady expressed his concerns as follows:

Is there an identifiable class of potential

plaintiffs who might be better suited than

Serfecz by virtue of their more direct injuries

to bring suit and whose self-interest would

motivate them to do so? In the case most

directly on point, Southaven, the Sixth

Circuit rather summarily concluded that

consumers or other market participants

would be more appropriate plaintiffs to seek

a remedy for restraint of trade or

monopolization in the grocery market.

While, in theory, we agree with the Sixth

Circuit, we lack that court’s confidence that

either of these two groups of potential

plaintiffs would be sufficiently motivated to

actually bring suit. We suggest that Serfecz

might be correct that a competing grocery

store not yet operating in the area, such as

Dominicks, would be more likely to forgo a

location than to incur the high start-up costs

of litigation. Indeed, according to plaintiffs,

the fact is that no competitor has filed an

antitrust lawsuit against Jewel although there

is evidence that Jewel has been restricting

locations throughout Illinois for the last ten

years. As regards aconsumer suit, the degree

27a

Appendix A

of harm suffered by an individual consumer

as a result of reduced competition in the

grocery market in Elk Grove Village would

probably not be sufficiently great to give him

incentive to sue. Thus, we fear that there is a

high risk that a significant antitrust violation

will go unremedied if we do not grant

plaintiffs standing to sue in this case. Mem.

Op. at pp. 19-20.

Admittedly, the prospect of there being no enforcement of the

antitrust laws here if the present suit fails is not dispositive, but

it should weigh significantly in the scales “An antitrust standing

determination is ultimately a product of the particularities of

each case.” Sanner v. Board of Trade, No. 94-2139 & No. 94-

2152, slip op. at 15 (7th Cir., Aug. 7, 1995). “McCready and

Associated General Contractors exemplify that innumerable

elements, including proximity and directness, constitute proper

areas of inquiry” in determining antitrust Standing. Southaven

Land Co., Inc. v. Malone & Hyde, Inc.,715 F.2d 1079, 1085 (6th

Cir. 1983). This case is a far cry from Associated General

Contractors, Inc. v. California State Council of Carpenters, 459

U.S. 519 (1983), where the injury to the plaintiff union was far

more speculative than any injury to landowners (customers) and

other contractors (competitors) to whom coercion was applied in

that case. Certainly these landowners and other contractors

could readily have sued had they in fact been injured. That is not

the case here.

I believe that this case is distinguishable from much of the

precedent because Jewel as an anchor tenant ina shopping center

occupies a dual role. It is no doubt a competitor in the retail

grocery market. But it (or its replacement if one is permitted) is

28a

Appendix A

also an essential ingredient of a successful shopping center.

Jewel’s refusal to permit competition is therefore in and of itself

a fatal blow to the viability of the center. The issue is whether

Serfecz has “antitrust” standing and I am persuaded that he does

in these limited circumstances—even though the injury to him is

indirect. Cf. Greater Rockford Energy & Technology Corp. v.

Shell Oil Co., 998 F.2d 391 (7th Cir. 1993), cert. denied, 1145S.

Ct. 1054 (1994).

Southaven Land Co., cited by the majority, is factually on

point but reaches a result opposite to the one I advocate here.

However, that case conceded that, “a finding or concession that

[the lessor] is not a direct participant in the relevant market is not

dispositive of the § 4 ‘standing’ issue.” 715 F.2d at 1086. The

Sixth Circuit went on to conclude that the injury to the lessor of

grocery store facilities was not “inextricably intertwined” with

the injury to the retail grocery market so as to make the analysis

in Blue Shield of Virginia v. McCready, 457 U.S. 465 (1982),

controlling. I think the analysis of the Sixth Circuit up to, but not

including, its final step is correct. I disagree, however, on the

question whether the injury to the retail grocery market here is

inextricably intertwined with the injury to Serfecz and the Grove

Mall. If, as is alleged, Jewel retained its lease on the empty store

in the Grove Mall with intent to monopolize the retail grocery

business in the area, it is difficult to see how damage to the Mall

would not have been foreseeable and inevitable. Therefore, I

believe that the one injury is inextricably intertwined with the

other. Injury to the Mall is surely more calculable than injury to

a potential competitor not yet present in the market. Cf. Hoopes

v. Union Oil Co., 374 F.2d 480 (9th Cir. 1967).

In the case before us, Judge Grady found:

Without elaborating in any detail, we believe

29a

Appendix A

that plaintiffs in the present case have

presented enough evidence for the trier of

fact to find a causal connection between the

absence of a grocery store anchor tenant and

the slow demise of the Grove Mall. There is

also evidence that Jewel acted deliberately to

prevent a competitor from occupying the

space in the Mall. Mem. Op. at 7.

It is also true that there is no problem of duplicative recovery here

because Serfecz presumably could recover the loss in value of

his shopping center due to his inability tc redevelop it, as well as

lost rental income. A potential competitor, on the other hand,

could recover the unrelated amount of lost profits, and a

consumer could recover damages due to higher prices. On

balance, therefore, I believe that Serfecz has antitrust standing

and should be allowed to proceed.

I therefore respectfully dissent.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

30a

APPENDIX B — MEMORANDUM OPINION OF THE

UNITED STATES DISTRICT COURT FOR THE

NORTHERN DISTRICT OF ILLINOIS, EASTERN

DIVISION DATED AUGUST 30, 1994

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

No.92C 4171

JOSEPH SERFECZ and FIRST CHICAGO TRUST

COMPANY, Trustee of Trust No. 684,

Plaintiffs,

JEWEL FOOD STORES, INC.}, et. al.,

Defendants.

MEMORANDUM OPINION

This case comes before the court on the motion of

defendants Jewel Food Stores, Inc., and American Stores

Properties, Inc., for summary judgment. For the reasons

discussed below, we grant the motion for summary judgment on

the antitrust and malicious prosecution claims in Counts I, II, and

III. ‘.ummary judgment on the breach of lease claim in Count IV

1. granted in part and denied in part.

Soiled

Se sei an La

AE AL AREAS PROD SS COMA aI CT ARE

‘

sale ih eisai tds Niacin’ Sadanad > ante tas tas eda ena ieee

3la

Appendix B

BACKGROUND

Plaintiff First Chicago Trust Company of Illinois, as trustee,

is the title holder of the Grove Mall Shopping Center (“Grove

Mall”) in Elk Grove Viilage. Plaintiff Joseph Serfecz is the

beneficial owner of this trust. In 1963 defendant Jewel Food

Stores, Inc. (“Jewel”) entered into a lease with plaintiffs’

predecessor-in-interest for retail space in the Grove Mall in

which to operate a grocery store. When Serfecz purchased the

Grove Mall in 1977, he assumed all existing leases, including the

Jewel lease. Jewel’s original lease ran until 1986 and provided

Jewel three five-year options to renew. Jewel has exercised two

of those options. Thus, its current lease runs until 1996, and it has

one remaining option to renew until 2001. Defendant American

Stores Properties, Inc. (“American Stores”) is the real estate

management and development arm of American Stores

Company and its subsidiaries, of which Jewel is one, and is

engaged in managing properties owned or rented by Jewel.

Up until October 1987, Jewel owned and operated a grocery

store in its leased space in the Grove Mall and was the mall’s

anchor tenant. In October of 1987, Jewel vacated the premises

and moved its grocery operation to a building in the newly

constructed Elk Crossing Mall, directly across the street from the

Grove Mall. Since that time, the space formerly occupied by

Jewel at the Grove Mall has remained vacant, and Jewel has

refused to give up its leasehold interest in the premises, thereby

preventing Serfecz from securing another grocery store as an

anchor tenant. Since vacating its space, Jewel has continued to

pay rent and has exercised its second option to renew the lease.

Jewel proposed to sublet the space to defendant United Skates of

America (“United Skates”), for use as a roller rink and games

32a

Appendix B

arcade. Serfecz objected to the proposed sublease because he

considered United Skates to be an “obnoxious” tenant and

because he was concerned that occupancy by United Skates

would result in higher insurance rates. In February 1990, Jewel

filed suit seeking a declaratory judgment regarding its right to

sublet to United Skates. The trial court ruled against Jewel, and

the appellate court affirmed.

Plaintiffs bring suit against Jewel, American Stores, and

United Skates, and against the developers, owners and operators

of the Elk Crossing Mall (collectively referred to herein as the

“Elk Crossing defendants”), alleging that the defendants

conspired to keep the Jewel space at the Grove Mall vacant, to

prevent a major anchor tenant from taking over the space, to

prevent Serfecz from re-developing the mall, to coerce Serfecz’s

other tenants to leave the Grove Mall and move across the street

to the Elk Crossing Mall, and to otherwise devalue and destroy

the Grove Mall. Plaintiffs maintain that this conspiracy is part of

an overall marketing strategy of restricting the use of property in

order to keep out competitors. In support of this claim, plaintiffs

offer evidence of other similar restrictive lease arrangements

throughout Illinois involving Jewel.

In Counts I and II of their complaint, plaintiffs maintain that

defendants have violated Sections 1 and 2 of the Sherman

AntitrustAct, 15 U.S.C. §§ 1,2, by conspiring to restrain trade by

eliminating competition in the grocery store and retail shopping

center markets, and attempting to monopolize the grocery store

business, the sale and development of commercial real estate,

and the business of operating a retail shopping center within the

relevant geographic market. Plaintiffs also bring state law

claims in Count III for malicious prosecution based on the

33a

Appendix B

February 1990 declaratory judgment suit brought by Jewel,' and

in Count IV for breach of lease. Before the court is the motion for

summary judgment of defendants Jewel and American Stores.’

DISCUSSION

I. Ant n

Defendants move for summary judgment on Counts I and II,

claiming that plaintiffs lack standing to bring antitrust claims

against Jewel. Private civil actions to enforce the Sherman Act

are allowed under Section 4 of the Clayton Act, 15 U.S.C.

§ 15(a), which provides that “any person who shall be injured in

his business or property by reason of anything forbidden in the

antitrust laws may sue therefor. . . and shall recover threefold

the damages by him sustained ....” However, despite this

seemingly broad grant of authority to sue, the Supreme Court has

emphasized that “Congress did not intend the antitrust laws to

provide a remedy in damages for all injuries that might

conceivably be traced to an antitrust violation.” Associated

General Contractors of California v. California State Counsel of

Carpenters, 459 U.S. 519, 534 (1983) (internal quotation marks

and citation omitted). Thus, even though a plaintiff might suffer

1. Defendants correctly point out that in our previous opinion of March

26, 1993, we ruled that no other litigation could serve as a basis for plaintiffs’

charge of maliciovs prosecution. Thus, we consider the malicious prosecution

claim only insofar as it is based on the February 1990 declaratory judgment

action.

2. Also pending is the motion of the Elk Crossing defendants for summary

judgment. However, due to repeated extensions in the briefing schedule, that

motion is not yet fully briefed and thus is not considered by the court at this time.

34a

Appendix B

sufficient harm to satisfy the constitutional standing

requirement of injury in fact, “the court must make the further

determination whether the plaintiff is a proper party to bring a

private antitrust action.” Jd. at535 n. 31. Even when an antitrust

violation under the Sherman Act has clearly occurred, Section 4

of the Clayton Act allows only certain private parties to bring suit

on the basis of that violation.? The Supreme Court recognized

that given “the infinite variety of claims” that might arise under

Section 4, it would be “virtually impossible to announce a black-

letter rule that will dictate the result in every case.” Jd. at 536.

Thus, the Court rejected rigid, one-dimensional tests for

standing such as the “target area,” “zone of interests,” or

“directness of injury” tests. Southaven Land Co. v. Malone &

Hyde, 715 F.2d 1079, 1085 (6th Cir. 1983) (citing Associated

General Contractors, 459 U.S. at 536 n.33). The Court instead

identified various factors that should guide a case-by-case

inquiry into whether a particular party has standing to seek an

antitrust remedy. /d. (citing Associated General Contractors,

459 U.S. at 537). Itis important to note at the outset that no single

factor is decisive; rather, the court must balance all of the factors.

3. As the Seventh Circuit explained in Indiana Grocery v. Super Valu

Stores, 864 F.2d 1409 (7th Cir. 1989), “While sections 1 and 2 of the Sherman

Act focus on competitive conditions in the marketplace as a whole, . . . section 4

of the Clayton Act focuses on the type of injury claimed by a particular plaintiff

and demands that it be an ‘antitrust injury.” ” /d. at 1419 (emphasis in original).

The Seventh Circuit elaborated further on this important distinction: “It is

tempting when performing an antitrust injury analysis to look first at the

substantive antitrust provision the defendant allegedly has violated, to note next

the harmful effects on competition the substantive provision is designed to

prevent, to note further that some of those harmful effects might fall on parties

such as the plaintiff, and to conclude, therefore, that the plaintiff should have

standing to vindicate the substantive antitrust provision.” Such an approach,

according to the Seventh Circuit, “stand(s) the antitrust injury inquiry on its

- head.” Jd. at 1419n. 6.

PELE ENTIRE IN RALER ST LEIS NYRR I. RA TM

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35a

Appendix B

R.C. Dick Geothermal v. Thermogenics, 890 F.2d 139, 146 (9th

Cir. 1989). See also, Los Angeles Memorial Coliseum v. N.F.L.,

791 F.2d 1356, 1363 (9th Cir. 1986), cert. denied, 484 U.S. 826

(1987) (“Most cases will find some factors tending in favor of

standing ... and some against ... and a court may finding

standing if the balance of factors so instructs.”).

The antitrust standing factors outlined by the Supreme

Court in Associated General Contractors have been described

and interpreted in various ways by the different circuit courts.

However, as our colleague noted in American Agriculture

Movement v. Board of Trade, 848 F. Supp. 814, 823 (N.D. Ill.

1994) (Marovich, J.), “[t]he differences between the expressions

of the Associated General Contractors factors are ones of form

rather than substance.” Thus we refer to cases from several

different circuits in our effort to better understand and apply the

guidelines established in Associated General Contractors.

The first Associated General Contractors factor to be

considered is whether there is a causal connection between the

antitrust violation and the harm to the plaintiff, and whether the

defendant intended to cause that harm. 459 U.S. at 537. Without

elaborating in any Getail, we believe that plaintiffs in the present

case have presented enough evidence for the trier of fact to find

a causal connection between the absence of a grocery store

anchor tenant and the slow demise of the Grove Mall. There is

also evidence that Jewel acted deliberately to prevent a

competitor from occupying the space in the mall.

Another factor considered important by the Supreme Court

in Associated General Contractors is the nature of the plaintiff’s

injury. The Court considered whether the injury was “ ‘of atype

that Congress sought toredress in providing a private remedy for

violations of Antitrust laws.’ ” Associated General Contractors,

36a

Appendix B

459 U.S. at 537 (citing Blue Shield of Virginia v. McCready, 457

U.S. 465, 483 (1982), bearing in mind the central policy

underlying the Sherman Act of “assur[ing] customers the

benefits of price competition,” and “protecting the economic

freedom of participants in the relevant market.” Associated

General Contractors, 459 U.S. at 538 (emphasis added).

In Southaven Land Co. v. Malone & Hyde, 715 F.2d 1079

(6th Cir. 1983), acase strikingly similar to the one now before us,

the Sixth Circuit considered the nature of the injury when

evaluating the standing of a lessor of retail commercial space to

challenge the alleged antitrust behavior of an owner and operator

of retail grocery stores. Defendant leased premises from plaintiff

Southaven for the purpose of operating a retail grocery business.

Defendant then executed a series of subleases with successive

third parties to operate grocery stores at the Southaven location.

At the time defendant entered into its lease with plaintiff and

thereafter, defendant also owned and operated other retail

grocery outlets in the same geographical area. The last of

defendant’s successive subtenants went bankrupt, and defendant

did not arrange for a replacement grocery store. Following the

business demise of the last sublessor, plaintiff sought to

negotiate a cancellation of defendant’s lease so that plaintiff

could replace defendant with a viable grocery operator, but

defendant refused to execute the proposed cancellation

agreement or otherwise surrender the premises, and removed its

equipment, thereby rendering the premises unfit for use as a

grocery. Like plaintiff Serfecz in the present case, Southaven

claimed that defendant intended to destroy the site as a location

for the operation of aretail grocery outlet and to monopolize the

grocery store market in the area. Jd. at 1081.

Following the Supreme Court’s guidance in Associated

General Contractors, the Sixth Circuit in Southaven analyzed

os Rg! ee

37a

Appendix B

the nature of the plaintiff's injury by examining the status of the

plaintiff in relationship to the relevant market. Jd. at 1085-86.

The court defined the relevant market as the retail grocery

industry in the geographical area of the Southaven property, id.

at 1086, and found that Southaven, as a lessor of retail

commercial premises to grocery stores, did not qualify as a

“competitor, purchaser, consumer or other economic actor in the

grocery industry,” even though its former and prospective

grocery store tenants did compete in that market. Jd. at 1081,

1086.

The Sixth Circuit noted, however, that under Blue Shield of

Virginia v. McCready, 457 U.S.465 (1982), aplaintiff who is not,

himself, a direct “participant” in the market, still may have

standing if his injury is “ ‘inextricably intertwined’ with the

injury sought to be inflicted upon the relevant market or

participants therein.” Southaven, 715 F.2d at 1086 (citing

McCready, 457 U.S. at 483). In McCready, plaintiff, a

psychotherapy patient, challenged her health insurance

provider’s practice of covering only the costs of seeing a

psychiatrist, not the expenses of a psychologist. The Supreme

Court found that plaintiff's injury as a consumer of

psychotherapeutic services was “inextricably intertwined” with

the injury sought to be inflicted on the suppliers of psychological

services, and thus, granted plaintiff standing to complain that

Blue Shield violated the antitrust laws by acting to restrain

competition in the market for psychotherapeutic services.

McCready, 457 U.S. at 483-84.

The Sixth Circuit applied the analysis of McCready to the

facts in Southaven, in order to determine whether the plaintiff

lessor’s injury was “inextricably intertwined” with the injury to

the grocery market. The court noted that the primary class of

persons injured by an antitrust violation are those adversely

38a

Appendix B

affected as a result of controlled prices or an exclusion of

competition. Southaven, 715 F.2d at 1087 n. 10. Because

Southaven was not alleged to be a “member of a class of

‘consumers’ of grocery products or a class otherwise

manipulated or utilized by [defendant] as a fulcrum, conduit or

market force to injure competitors or participants in the relevant

product and geographical markets,” the Sixth Circuit concluded

that the injuries suffered by the plaintiff as an owner and lessor

of retail space were not sufficiently intertwined with the injuries

to the grocery market to give plaintiff standing under the rule of

McCready. Id. at 1086. The Sixth Circuit further explained:

“Although Southaven’s injury may be a tangental [sic] by-

product of [defendant’s] averred monopolistic conduct, such

injury is not inextricably intertwined to any injury inflicted upon

the relevant market. . . . Its injury is not sufficiently linked tothe

pro-competitive policy of the antitrust laws.” Jd. at 1086-87

(emphasis in original).

In another case of warring grocery stores, the Southern

District of New York applied the rules of Associated General

Contractors, McCready, and Southaven, to evaluate the standing

of the owner and developer of a shopping mall to complain that

the defendant supermarkets conspired to prevent a grocery store

from opening in its mall by filing state court lawsuits and

attending local planing commission hearings to prevent the

issuance of necessary permits. Rosenberg v. Cleary, Gottlieb,

598 F. Supp. 642 (S.D.N.Y. 1984). The court dismissed the

antitrust counts because the alleged violation related to “the

retail grocery business,” and plaintiff, as a mall developer and

owner, was not a direct participant in that market. /d. at 645.

Rather, plaintiff's injuries related to its role as a participant in the

construction and real estate market, and as such, were only

tangentially related to the alleged antitrust violations and

. resulting lack of competition in the grocery market. Jd. Thus, the

39a

Appendix B

court found plaintiff to be an “inappropriate” antitrust

complainant. Jd.

We turn now to examine the case law in our own circuit

regarding the nature of the injury aspect of the standing analysis.

A leading Seventh Circuit case on the issue is Southwest

Suburban Bd. of Realtors v. Beverly Area Planning Assoc. , 830

F.2d 1374 (7th Cir. 1987). In Southwest Suburban, the Seventh

Circuit evaluated the standing of a trade association that

provided listing services to real estate brokerage firms to

challenge the defendant neighborhood planning association and

defendant brokers’ purported antitrust violations. The complaint

alleged that the defendants conspired to boycott the plaintiff's

listing service, and encouraged consumers to boycott the listing

service as well. Jd. at 1379. As a result of the conspiracy, the

plaintiff was no longer able to provide a comprehensive listing

of properties to its subscribers.

Like the Sixth Circuit in Southaven, the Seventh Circuit’s

inquiry into the nature of the plaintiff’s injury in Southwest

Suburban focused on plaintiff’s status in relationship to the

relevant market. The Southwest Suburban court concluded that

the plaintiff trade association lacked standing to sue for antitrust

violations because it was neither a supplier nor a purchaser in the

market for real estate brokerage services. Jd. at 1379. Rather, the

plaintiff acted as a supplier of a product, its list, to brokers.

Noting the general rule in the Sevenih Circuit that “suppliers of

an injured customer may not seek recovery under the antitrust

laws because their injuries are too ‘indirect, secondary, or

remote,’ ” id. (citing Jn re Industrial Gas Litigation, 681 F.2d

514, 519-20 (7th Cir. 1982), cert. denied, 460 U.S. 1016(1983)),

the court held that “any injury which [plaintiff] sustained by

virtue of defendants’ alleged boycott of the [listing service] was

40a

Appendix B

only indirectly related and incidental to the anticompetitive

scheme, the intent and effect of which was. . . to gaincontrol of

the real estate brokerage services market.” Jd.

The paramount status of the consumer in antitrust law is

made clear by other cases in the Seventh Circuit applying and

interpreting the nature of the injury factor. The court closely

scrutinizes whether the interests of the plaintiff are in line with

the interests of the consumers: “ ‘When the plaintiff is a poor

champion of consumers, acourt must be especially careful not to

grant relief that may undercut the proper functions of

antitrust.’ ” Nelson v. Monroe Regional Medical Center, 925

F.2d 1555, 1564 (7th Cir. 1991) (citation omitted). As the

Seventh Circuit explained in Ball Memorial Hosp. v. Mutual

Hosp. Ins., 784 F.2d 1325, 1338 (7th Cir. 1986), even a

competitor in the market does not necessarily share the

consumer’s interest (and the antitrust laws’ interest) in the

protection and promotion of competition: “Action that injures

rivals may ultimately injure consumers, but it is also perfectly

consistent with competition.” Jd. at 1338 (emphasis in original).

After all, the antitrust laws were designed to protect competition,

not individual competitors. Jd. (citing Brunswick v. Pueblo

Bowl-O-Mat, 429 U.S. 477, 488 (1977)).

In Garot Anderson Marketing v. Blue Cross, 772 F. Supp.

1054, 1062 (N.D. Ill. 1990), a colleague in this district applied

the antitrust standing rules established in McCready and

Southwest Suburban to determine whether the plaintiff

insurance agents and agencies who sold the insurance products

of one of the defendant insurance companies had standing to

challenge the actions of the defendants in allegedly conspiring

not to compete with each other for a particular business.

Plaintiffs alleged that they were injured by the loss of sales

4la

Appendix B

commissions resulting from the termination of a certain

insurance product. The court concluded that the rule of

Southwest Suburban did not bar the plaintiffs’ suit. The court

explained that “the plaintiff need not be the target of the alleged

conduct. . . . ltis sufficient that the plaintiff participated in some

relevant way in the part of the market endangered by the alieged

antitrust violation.” Jd. at 1062. Apparently, the court found that

the plaintiffs’ status as sellers of insurance qualified them as

“participants” in the same market as the defendant suppliers of

insurance.

Underlying the courts’ efforts in Associated General

Contractors, McCready, and their progeny, to limit antitrust

standing to marketplace participants is the awareness that

without such limits, the courts would be overwhelmed with

duplicative antitrust litigation, and the knowledge that Congress

did not intend the antitrust laws to provide acatch-all remedy for

every injury remotely linked to an antitrust violation. The

Supreme Court in Associated General Contractors noted the

“strong interest . . . in keeping the scope of complex antitrust

trials within judicially manageable limits.” 459 U.S. at 543. As

the Court explained in McCready,

[a)n antitrust violation may be expected to

cause ripples of harm to flow through the

Nation’s economy; but despite the broad

wording of § 4 [the Clayton Act] there is a

point beyond which the wrongdoer should

not be held liable. ... It is reasonable to

assume that Congress did not intend to allow

every person tangentially affected by an

antitrust violation to maintain an action to

recover threefold damages for [his] injury.

42a

Appendix B

457 U.S. at 476-77 (internal quotation marks and citation

omitted).*

We turn now to the arguments in this case regarding the

nature of Serfecz’s injury as reflected by his status in relationship

to the relevant marketplace, and the connection between his

injury and the injury to that market. Defining the relevant market

as the retail grocery industry, we, like the Sixth Circuit in

Southaven, find that Serfecz, as a lessor of retail premises, does

not qualify as a competitor or consumer in this industry, even

though his former and prospective future tenants compete in that

market. The case law in our own circuit supports this conclusion.

In Southwest Suburban, 830 F.2d 1374 (7th Cir. 1987), the

Seventh Circuit concluded that the plaintiff trade association,

which supplied a real estate listing service to brokers, could not

sue certain brokers for antitrust violations in the brokerage

market because it was neither a direct supplier nor a purchaser in

the relevant market. Similarly, Serfeczis neither a direct supplier

nor purchaser in the grocery market. Rather, Serfecz, like the

4. Fear of opening the floodgates was obviously a motivating factor

behind the Sixth Circuit's denial of standing in Southaven. The Sixth Circuit

worried that if it were to permit the shopping center landlord to sue the vacating

grocery store for damages predicated upon diminished lease revenue resu!ting

from reduced consumer activity at his shopping center, it would also have to

grant standing to the other lessees as well, predicated upon their diminished

sales. Southaven, 715 F.2d at 1088 n. 12. In Alpha Shoe Service v. Fleming

Companies, 849 F.2d 352 (8th Cir. 1988), cert. denied, 488 U.S. 942 (1988), the

Eighth Circuit rejected just such a suit brought by shopping center tenants

against a grocery store anchor tenant who vacated its space and left it empty for

an extended period of time. The court declined to adopt plaintiffs’ broad

characterization of the relevant market as “the attraction of consumers,” and

found that the tenants lacked standing because they “were not competitors,

participants, or consumers in the relevant market.” /d. at 354. The court rejected

plaintiffs’ broad definition of the market for fear of “expand[ing] the scope of

the private antitrust action far beyond its intended bounds.” /d.

43a

Appendix B

listing service, can be thought of as a supplier to the grocery

stores which do directly compete in the market: he supplies retail

space. Under the general rule stated in Southwest Suburban, the

injuries of suppliers such as Serfecz are too indirect to support

standing.

Serfecz argues that under McCready he has standing to sue

because even though he is not a direct market participant, his

injury is “inextricably intertwined” with the injury to the grocery

market. Serfecz offers a creative argument regarding the close

business tie that exists between a shopping mall developer anda

grocery store anchor tenant; however, according to the case law,

this does not qualify him as inextricably intertwined with the

grocery market under the rule of McCready. As we explained

above, the plaintiff in McCready, while not herself a competitor

in the market for psychotherapeutic services, was actually a

consumer of such services.

Plaintiffs also argue that Serfecz has standing because

Jewel’s actions were “aimed squarely at Serfecz and the Grove

Mall, and not directly at a competitor.” They cite Hoopes v.

Union Oil Co., 374 F.2d 480 (9th Cir. 1967), as a source for their

reasoning. Plaintiffs’ memorandum in Support of its Response to

the Motion for Summary Judgment (“Plaintiffs’ Response”) at 5-

6. However, the “target area” test for standing employed by the

Ninth Circuit in Hoopes was rejected by the Supreme Court in

Associated General Contractors, 459 U.S. at 536 n. 33.°

5. Responding to the emphasis in the case law and defendants’

memorandum in support of their motion for summary judgment on the market

status of an antitrust plaintiff, Serfecz also resorts to the argument that he is in

fact a consumer in the market because he shops for groceries in Elk Grove

Village, and that, in order to sustain his shopping center, he is “willing” to

(Cont'd)

44a

Appendix B

In its desire to keep antitrust litigation within judicially

manageable bounds and avoid duplicative suits, without forcing

antitrust violations to go unchallenged altogether, the Supreme

Court in Associated General Contractors also considered

whether a party more directly injured by the violations might file

suit as another factor relevant to the standing inquiry. “The

existence of an identifiable class of persons whose self-interest

would normally motivate them to vindicate the public interest in

antitrust enforcement diminishes the justification for allowing

amore remote party . . .to perform the office of a private attorney

general.” 459 U.S. at 542. If more direct victims exist, denial of

standing to those only tangentially injured “is not likely to leave

a Significant antitrust violation undetected or unremedied.” Jd.

Applying a similar rationale in a case which foreshadowed the

Supreme Court’s reasoning in Associated General Contractors,

the Seventh Circuit emphasized the importance of limiting

antitrust standing to those plaintiffs able to most efficiently

vindicate the antitrust laws. Jn re Industrial Gas Litigation, 681

F.2d 514,516 & 520 (7th Cir. 1982). Thus, the standing inquiry

focuses “not only on whether there has been an ‘antitrustinjury,’

but also on whether the particular plaintiff is the appropriate

antitrust enforcer.” Jd. at 520. Like the Supreme Court in

Associated General Contractors, the Seventh Circuit strove to

strike a balance between the interest in “deterrence through

private antitrust enforcement and redress for injury,” on the one

(Cont'd)

become a competitor in the market by opening his own grocery store in the

Grove Mall. Plaintiffs’ Response at 7. However, the antitrust allegations in the

complaint frame this case as a suit to remedy the injuries suffered by Serfecz as

the owner of acompeting shopping mall, not the injuries he may have suffered as

a grocery consumer or prospective grocery store competitor. Thus, we reject

Serfecz’s last ditch efforts to obtain standing by re-casting his case in a manner

unsupported by the complaint.

45a

Appendix B

hand, and “the avoidance of excessive treble damages

litigation,” on the other hand. Jd. The court concluded that the

proper compromise could best be achieved by granting standing

“only to those who, as consumers or competitors, suffer

immediate injuries . . . while excluding person whose injuries

were more indirectly caused by the antitrust conduct.” Jd. The

court believed that “this select class of plaintiffs” would be able

to “impose the deterrent sting of treble damages at the smallest

cost of enforcement.” Jd. The Seventh Circuit thus reduced this

aspect of the inquiry to a basic costs/benefits analysis.

Under the rationale articulated in Associated General

Contractors and Industrial Gas, the courts search for the most

directly injured — and thus, presumably, the best — plaintiff.

Accordingly, the Seventh Circuit in Southwest Suburban

concluded that brokers who subscribed to plaintiff’s listing

service and whom might have been hurt by the boycott of the

listing service would serve as more appropriate plaintiffs than

the listing service itself, because their injuries were more direct.

830 F.2d at 1379-80. The Ninth Circuit in R.C. Dick Geothermal

Corp. v. Thermogenics, 890 F.2d 139 (9th Cir. 1989), considered

the standing of the landlord of one of the defendants to complain

that the defendants’ conspiracy to restrain trade by slowing

production injured the landlord by reducing the royalties it

received under the lease. The Ninth Circuit denied standing

because the landlord, although injured by his decreased royalties

revenue, was not the most directly injured potential plaintiff;

rather, the court concluded that other sellers in the market would

be “in a far better position to champion the public interest in

vigorous antitrust law enforcement.” Jd. at 148. Likewise, in

Rosenberg, the Southern District of New York observed that both

supermarket consumers and the plaintiff shopping mall

developer’s prospective grocery store tenant would be more

46a

Appendix B

suitable complainants regarding the defendant supermarket’s

alleged actions in restraint of trade in the grocery store market.

And, finally, in Southaven, the Sixth Circuit briefly noted that

consumers and other market participants would be more direct

victims, and thus, by implication, better plaintiffs.

We now consider whether a similar rationale can be applied

to the present case: Is there an identifiable class of potential

plaintiffs who might be better suited than Serfecz by virtue of

their more direct injuries to bring suit and whose self-interest

would motivate them todo so? In the case most directly on point,

Southaven, the Sixth Circuit rather summarily concluded that

consumers or other market participants would be more

appropriate plaintiffs to seek a remedy for restraint of trade or

monopolization in the grocery market. While, in theory, we agree

with the Sixth Circuit, we lack that court’s confidence that either

of these two groups of potential plaintiffs would be sufficiently

motivated to actually bring suit. We suspect that Serfecz might

be correct that acompeting grocery store not yet operating in the

area, such as Dominicks, would be more likely to forgo a location

than to incur the high start-up costs of litigation. Indeed,

according to plaintiffs, the fact is that no competitor has filed an

antitrust lawsuit against Jewel although there is evidence that

Jewel has been restricting locations throughout Illinois for the

last ten years. As regards a consumer suit, the degree of harm

suffered by an individual consumer as a result of reduced

competition in the grocery market in Elk Grove Village would

probably not be sufficiently great to give him incentive to sue.

Thus, we fear that there is a high risk that a significant antitrust

violation will go unremedied if we do not grant plaintiffs

standing to sue in this case. However, the case law in the various

circuits, including our own, makes it clear that the mere

existence of competitors or consumers in the relevant market

47a

Appendix B

who could sue is considered a factor in favor of denying standing.

Where a more directly injured class of potential plaintiffs exists,

we are left with very little leeway to address the likelihood of

whether any members of that class would actually bring suit.

While the result may be somewhat frustrating in this particular

case, it does provide a straightforward rule of law and eliminates

the need for us to consider evidence on the speculative question

of whether and when a more appropriate plaintiff might sue.

The Supreme Court in Associated General Contractors

examined the directness of the plaintiff’s injury as a factor in the

standing analysis not only to prevent excessive and duplicative

litigation, but also to avoid highly complicated damage

determinations. 459 U.S. at 542-544. As the Sixth Circuit

explained in Southaven, “indirect injuries may render damages

highly speculative or create situations of complexity that would

foreclose an equitable determination and apportionment of

damages.” 715 F.2d at 1087. The Sixth Circuit reviewed the

damages sustained by the plaintiff shopping center lessor in

Southaven, and noted that there had been no breach or failure to

perform under the lease; in fact, the defendant grocery store

operator had continued to tender rental payments when due even

though it was no longer operating at the Southaven location.

Rather, the plaintiff complained of its inability to command

premium rent from its other lessees (or perhaps to even attract

lessees at all) due to the reduced consumer traffic at a shopping

center without an operating grocery store. The Sixth Circuit

believed that “ascertainment of damages to compensate such

injury would necessitate wide ranging speculation, particularly

since diminished consumer activity at any given shopping area

could result from myriad independent reasons unrelated to the

alleged antitrust violation.” Southaven, 715 F.2d at 1087. Thus,

at the heart of the Sixth Circuit’s preference for antitrust

48a

Appendix B

plaintiffs with direct injuries, is the difficulty inherent in

establishing causation of an indirect injury, which in turn creates

difficulty in determining damages. Thus, the existence of a

causal connection between the antitrust violation and the harm

to the plaintiff is not only an independent factor in the Associated

General Contractors analysis, supra p. 6-7, but also underlies

the examination, under Associated General Contractors, of the

directness of the plaintiff’s injury.

In Greater Rockford Energy & Technology v. Shell Oil Co.,

998 F.2d 391 (7th Cir. 1993), cert. denied, 114S.Ct. 1054 (1994),

the Seventh Circuit, too, acknowledged the difficulty of proving

that the harm suffered by a plaintiff resulted from the alleged

antitrust activity. “An antitrust violation need not be the sole

cause of the alleged injuries, but the plaintiff must establish, with

a fair degree of certainty, that the violation was a material

element of, and substantial factor in producing, the injury.” Jd. at

401. Where there was not just one, but numerous intervening

economic and market factors which could offer an alternative

explanation for plaintiff’s injuries, the Seventh Circuit observed

that it would be difficult for the plaintiff to prove that the antitrust

violations were the cause of the injuries. Jd. at 402-404.

We turn now tothe present case, and consider the difficulties

facing Serfecz in attempting to prove that the injuries he suffered

resulted from Jewel’s alleged antitrust violations. Defendants

argue that numerous factors might explain Serfecz’s inability to

attract either tenants or developers to the Grove Mall, including

its aging, dilapidated condition, its poor design, and the presence

of a new, more attractive competing mall across the street.

Defendants are correct that in light of these possible independent

reasons for the decline of the Grove Mall, it may be difficult for

Serfecz to prove that his injuries were caused by antitrust

49a

Appendix B

violations. However, as we mentioned when discussing

causation as an independent factor in the Associated General

Contractors analysis, we believe that plaintiffs have cited

enough evidence to raise a material issue of fact regarding

causation. For example, ina sworn declaration, plaintiffs’ retail

shopping center expert explained that because of Jewel’s actions

in continuing to claim a leasehold interest in the premises,

commencing various litigation against Serfecz, and attempting

to sublet to a roller rink with arcade games, prospective tenants

and redevelopers would have no interest in the Grove Mall.

Plaintiffs’ Exhibits to Plaintiffs’ Response, Declaration of

Kenneth Leonard. However, there is still room for the kind of

concern raised in both Southaven and Greater Rockford Energy

& Technology regarding the difficulties of allocating the

damages amongst the “myriad” possible causes.

In summary, applying the factors established by the

Supreme Court in Associated General Contractors, we find that

plaintiffs lack standing tochallenge Jewel’s antitrust activity in

the retail grocery market. We believe that Serfecz has raised a

dispute of material fact regarding whether Jewel’s alleged

antitrust conduct caused his harm. However, we are ultimately

persuaded by the Sixth Circuit’s reasoning in Southaven, as well

as that of the Southern District of New York in Rosenberg, that

plaintiffs’ injuries were too indirect to be considered

inextricably intertwined with the injury to the relevant

marketplace, the retail grocery business, and thus the plaintiffs

are not the proper plaintiffs to challenge antitrust activity in that

market. The emphasis in our own circuit on the interests of the

consumer and the status of a plaintiff in relation to the

marketplace persuades us that the approach to the shopping

center/grocery store battle taken by the Sixth Circuit in

Southaven and the Southern District of New York in Rosenberg

50a

Appendix B

would be good law here in the Seventh Circuit. Thus, we grant

Jewel’s motion for summary judgment and dismiss for lack of

standing plaintiffs’ antitrust claims against both Jewel and

American Stores in Counts I and II of the complaint insofar as

they pertain to Jewel’s alleged antitrust activities in the retail

grocery market.®

However, plaintiffs’ antitrust claims against Jewel are not

limited to the grocery business. Plaintiffs also have clearly

alleged that Jewel participated in a conspiracy with the Elk

Crossing defendants and United Skates to restrain trade and

monopolize sales and development in the business of operating

a retail shopping center and leasing commercial premises to

retail tenants. See, e.g., Complaint at {J 25, 40, 85, 86.

Defendants have offered no dispute regarding the direct injuries

suffered by plaintiffs as participants in that market,’ and thus, we

6. In arguing the motion for summary judgment brought by Jewel and

American Stores, the parties have made no attempt to distinguish the situation of

Jewel from that of its property manager and sister company, American Stores.

Apparently, the parties view the role of these two defendants as identical.

Therefore, even though very little information has been provided to the court

regarding American Stores, as distinguished from Jewel, we assume that its

responsibility for the alleged antitrust activities is the same of that of Jewel, and

we treat it identically for purposes of this motion for summary judgment.

7. Indeed, defendants, themselves, at one point acknowledge that Jewel

might be found liable for antitrust violations in the market for retail shopping

centers on a conspiracy theory. See Defendants’ Memorandum in Support of

Motion for Summary Judgment (“Defendants’ Memorandum”) at 12 n.1.

(“Because Jewel does not compete in the market for retail shopping centers. . .

Jewel cannot be found to have monopolized. . . this market. . . . Jewel can only

be found liable on a monopolization theory in this market by virtue of a

conspiracy.”)

Sla

Appendix B

conclude that plaintiffs have standing to challenge Jewel's

actions in relation to the market for operation of retail shopping

centers. However, our determination that plaintiffs have

standing to asset limited antitrust claims against Jewel does not

end our review of the motion for summary judgment. The motion

raises substantive challenges to the antitrust claims which go

beyond the question of standing. These challenges will be

discussed infra in Part II of this opinion.

Il. The Merits of Plaintiffs’ Claims of Antitrust Violations

Summary judgment “shall be rendered forthwith if the

pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law.” Fed. R.

Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, (1986).

A “genuine issue of material fact exists only where ‘there is

sufficient evidence favoring the nonmoving party for a jury to

return a verdict for that party.’ ” Dribeck Importers, Inc. v. G.

Heileman Brewing Co., 883 F.2d 569, 573 (7th Cir. 1989)

(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249

(1986)). In considering such a motion, the court must view all

inferences in the light most favorable to the nonmoving party.

See Regner v. City of Chicago, 789 F.2d 534, 536 (7th Cir. 1986).

Summary judgement will be granted “against a party who fails to

make a showing sufficient to establish the existence of an

element essential to that party’s case, and on which that party will

bear the burden of proof at trial.” Celotex, 477 U.S. at 322.

Defendants argue that even if plaintiffs have standing to

bring antitrust claims against Jewel, plaintiffs have failed to

make a factual showing sufficient to establish the essential

52a

Appendix B

elements of those claims. In order to establish a violation of

Section 1 of the Sherman Act, plaintiffs must establish the

existence of a contract, combination or conspiracy intended to

restrain competition. Greater Rockford Energy & Technology,

998 F.2d at 396. Plaintiffs claim that Jewel and American Stores

participated in a conspiracy to restrain trade in the retail

shopping center market in violation of Section 1 by helping to

destroy the viability of the Grove Mall. In furtherance of that

conspiracy, Jewel ceased operations at Grove Mall, vacated the

premises and moved across the street to the newer Elk Crossing

Mall, yet continued to renew its lease at the Grove Mall, thereby

tying up the anchor tenant space and preventing another grocery

store from moving in. Subsequently, Jewel attempted to sublet to

United Skates for the “obnoxious” use of operating a roller rink

with arcade games.

The plaintiff bears the ultimate burden of proving that there

was in fact such a conspiracy. Market Force v. Wauwatosa

Realty, 906 F.2d 1167, 1170 (7th Cir. 1990) (citing Monsanto v.

Spray-Rite Serv., 465 U.S. 752, 763 (1984)). However, a

conspiracy to engage in anti-competitive conduct “need not, and

generally will not, be established by direct evidence.”

Contractor Utility Sales v. Certain-teed Products, 638 F.2d

1061, 1074 (7th Cir. 1981). Rather, “[t]he requisite concerted

action may be inferred from . . . circumstantial evidence.” Jd.

Following the holdings of the Supreme Court in Matsushita

Elec. Indus v. Zenith Radio, 475 U.S.574 (1986), and Monsanto

regarding the sufficiency of the standard of proof in a Section |

claim, the Seventh Circuit has adopted a three-step inquiry. The

court first reviews the plaintiff's evidence of aconspiracy. The

court then considers whether the plaintiff’s evidence of

conspiracy is ambiguous; that is, is it as consistent with the

defendants’ permissible, legitimate independent business

53a

Appendix B

interests as with an illegal conspiracy? If the defendants can

show a plausible and justifiable reason for their conduct that is

consistent with proper business practice, the burden then shifts

to the plaintiff to come forward with direct or circumstantial

evidence that tends to exclude the possibility that defendants

were pursuing these independent interests. Market Force, 906

F.2d at 1170-71. If the plaintiff cannot do so, a grant of summary

judgment for the defendant is appropriate. Jd.

In Monsanto, a price-fixing case, the Supreme Court

applied this standard, and concluded that there was atriable issue

of fact regarding the existence of aconspiracy. The evidence in

that case included direct evidence of agreements to maintain

prices, such as testimony from a district manager that defendant

Monsanto approached price-cutting distributors and warned

them that if they did not maintain the suggested resale price, they

would not receive adequate supplies of acertain product. When

one of the distributors did not agree, Monsantocomplained to the

distributor’s parent company, and the parent company instructed

its subsidiary to comply; the distributor then informed Monsanto

that it would charge the suggested price. The Court found this

evidence “plainly ... persuasive as to a meeting of minds.”

Monsanto, 465 U.S. at 765. In Market Force, by contrast, the

Seventh Circuit noted that evidence of informal

communications and meetings among defendants, and of

similarity in policies, for example, would not be considered

unambiguous support for a inference of conspiracy. Market

Force, 906 F.2d at 1172-73.

We apply the analytical framework of Monsanto and

Matsushita, as set forth in Market Force, to the facts of the

present case. Plaintiffs’ prima facie evidence of Jewel’s

involvement in the averred conspiracy is the fact that Jewel

54a

Appendix B

benefitted greatly from the slow but steady demise of the Grove

Mall and the resulting increase in consumer traffic at the Elk

Crossing Mall. Therefore, plaintiffs argue, Jewel had a

compelling motive to participate in a conspiracy. When

considering whether a genuine issue for trial exists on aclaim of

antitrust conspiracy, the Supreme Court views evidence of

motive to conspire, or lack thereof, as “highly relevant.”

Matsushita, 475 U.S. at 595-97. “Lack of motive bears on the

range of permissible conclusions that might be drawn from

ambiguous evidence: if petitioners had no rational economic

motive to conspire, and if their conduct is consistent with other,

equally plausible explanations, the conduct does not give rise to

an inference of conspiracy.” Jd. at 596-97.

Defendants argue that Jewel’s purported actions in

furtherance of the alleged conspiracy were entirely consistent

with Jewel’s permissible independent business interests. Jewel

maintains that it moved to the Elk Crossing Mall in order to take

advantage of the newer, larger, and overall more attractive

facilities and open a companion Osco drugstore (which was

prohibited under its lease at the Grove Mall). Jewel further

maintains that it attempted to sublet to United Skates simply to

fulfill its legitimate business interest in earning some rent on the

property. Similarly, Jewel’s departure from the Grove Mall to

serve as the anchor tenant at Elk Crossing also served the

legitimate business interests of Jewel’s alleged co-conspirators,

the Elk Crossing defendants. However, what Jewel has failed to

satisfactorily explain to the court is its legitimate interest in

continuing to pay rent on a vacant store and its refusal to cancel

the lease or accept Serfecz’s offer to pay the rent Jewel would

have received from United Skates. Certainly, the rational trier of

fact might conclude that Jewel’s motive in refusing was purely

anticompetitive.

55a

Appendix B

However, plaintiffs are not yet over the hurdle in terms of

meeting their burden of proof of conspiracy under Section | of

the Sherman Act. A “fundamental prerequisite” of a Section |

violation “is unlawful conduct by two or more parties pursuant

to an agreement, explicit or implied.” Contractor Utility Sales,

638 F.2d at 1074. Thus, evidence that two defendants each

benefitted from anticompetitive practices does not itself

establish an unlawful conspiracy; evidence of an agreement is

critical. Jd. at 1075. “Solely unilateral conduct, regardless of its

anticompetitive effects, is not prohibited by Section 1. Rather

... there must be evidence that two or more parties have

knowingly participated in a common scheme or design to

accomplish an anti-competitive purpose.” Jd. at 1074.

It is on this issue that plaintiffs’ response to the defendants’

summary judgment motion is notably silent. Certainly, there is

evidence that both Jewel and the Elk Crossing defendants reaped

the benefits of the demise of the Grove Mall. But on the issue of

conspiracy, plaintiffs offer only speculation, hunch, and theory.’

For example, as evidence of the Elk Crossing defendants’

participation in the purported anticompetitive scheme, plaintiff

emphasizes that the Elk Crossing defendants planned from the

start to duplicate the tenant mix of the Grove Mall. Plaintiffs

maintain that “[nJo rational real estate developer would

duplicate the tenant mix of a mall directly across the street unless

he knew the existing mall was going to be devalued and

8. We note also that what few arguments plaintiffs do advance regarding

the existence of a conspiracy concern only Jewel and the Elk Crossing

defendants and United Skates; no attempt has been made by plaintiffs to suggest

that their claim of a Section | violation might be based on a conspiracy between

Jewel and its sister company, American Stores. In fact, as discussed earlier,

supra note 6, very little at all has been said by either party about American

Stores. Thus, we do not address whether evidence of such a conspiracy would

constitute a proper basis for a Section | claim.

56a

Appendix B

prohibited from competing and obtaining new tenants,”

Plaintiffs’ Response at 16, and ask us to infer from the

duplication a conspiracy to devalue the Grove Mall. In support

of their theory, plaintiffs cite the opinion of their shopping center

expert that “the way the center was planned clearly showed a

“very strong, very confident pattern of activity that showed

[defendants] had no fear of competition coming from the old

center.’ ” Plaintiff’s Response at 16 (citing Leonard Deposition

at 114). The persuasiveness of this opinion is doubtful, given the

commonplace appearance of look-alike strip-malls on opposite

corners of busy intersections throughout the suburbs. Be that as

it may, the fact that the Elk Crossing defendants may have been

fairly confident that they would be able to successfully compete

with the dilapidated mall across the street is not itself sufficient

evidence of aconspiracy between Jewel and American Stores

and these defendants. Plaintiffs emphasize also the close

business tie between a grocery anchor tenant and the shopping

center location it occupies, characterizing Jewel as a “partner in

interest” with the owners and developers of the Elk Crossing

Mall. While it is true that the business interests of the anchor

tenant and the interests of the landlord shopping mall may be

aligned, this “confluence of interest,” to quote plaintiffs, is not,

alone, sufficient evidence to support an inference of

participation in an illegal antitrust conspiracy.

In the absence of evidence of an agreement between Jewel

and American Stores and their co-defendants to destroy

competition, we must grant the motion for summary judgment as

to plaintiffs’ claims of Sherman Act Section 1 violations in

Count I.’

9. Plaintiffs complain repeatedly of delays in production of various

discovery materials and their inability to take the deposition of defendant

(Cont'd)

57a

Appendix B

For similar reasons, we must also grant defendants’ motion

for summary judgment on plaintiffs’ claims in Count II of

monopolization in violation of Section 2 of the Sherman

Antitrust Act. Section 2 of the Sherman Act, unlike Section 1,

does not require proof of a conspiracy between two or more

parties; rather, the focus of this section is on the actions of a

single firm to control a market. 15 U.S.C. § 2; Okansen v. Page

Memorial Hosp., 945 F.2d 696, 710 (4th Cir. 1991), cert. denied,

112S. Ct. 973 (1992). However, because of our findings in Part

I of this opinion, supra pp. 22-24, regarding standing, evidence

of aconspiracy between defendants Jewel and American Stores

and the Elk Crossing defendants would be required. We found

that plaintiffs had standing to challenge Jewel’s actions only in

relation to the retail shopping center market, not the grocery

market. Obviously, Jewel and American Stores could not, by

themselves, illegally monopolize the market for retail shopping

centers. They could, however, be found liable for Section 2

violations by virtue of a conspiracy between themselves and

players in the retail shopping center market, the Elk Crossing

defendants. Because the plaintiffs have not presented sufficient

evidence to raise a genuine issue of concerted action between the

(Cont'd)

Patrick F. Daly, real estate developer and president of the beneficial owner of

the Elk Crossing Mall. Yet, it was upon plaintiffs’ own motion that the court

agreed to consider this motion on an expedited basis. See Order of June 29, 1994.

Thus, it would be difficult for plaintiffs now to argue that the matter was not yet

ripe for summary judgment due to incomplete discovery. However, we can

make no definitive assessment regarding the status of discovery because on

October 20, 1993, we referred all discovery disputes to the designated

Magistrate-Judge. If, after additional discovery, plaintiffs are able to present

evidence in support of their conspiracy claim, and can demonstrate why this

evidence was not available earlier, we would be willing to entertain a motion to

reconsider.

58a

Appendix B

two sets of defendants, we must grant summary judgment for

Jewel and American on Count II as well.

III. The Breach of Lease Claim

In Count IV of their complaint, plaintiffs claim that Jewel’s

actions in keeping its space at the Grove Mall dark and vacant in

furtherance of its alleged antitrust goals constitutes a breach of

requirements in its lease that the premises be used only to operate

a grocery store and only for lawful purposes.

A. Unlawful Use

The first sentence of Paragraph 1 of Jewel’s jease (“sentence

1”) provides:

Lessee shall not use the demised premises for

any unlawful purpose nor shall it commit

waste.

and the second sentence (“sentence 2”) provides:

It shall comply with all lawful requirements

of the local Board of Health, Police and Fire

Departments, and state and federal

authorities, respecting the manner in which it

uses the leased premises.

Defendants’ Memoranda, Exhibit 4 (“Lease”). Plaintiffs

maintain that Jewel’s use of the premises to restrain trade and to

monopolize the grocery store business violates Sections 1 and2

of the Sherman Act, and thus constitutes an unlawful use of the

premises in violation of sentence | of paragraph | of the lease.

59a

Appendix B

Because we have found in Part II of this opinion that plaintiffs

have not met their burden of proof of conspiracy and, thus, have

not established a Section 1 violation, Section 1 cannot serve as a

basis for plaintiffs’ breach of lease claim. As regards the alleged

Section 2 violation, we found that plaintiff had Standing to

challenge Jewel only in relation to the retail shopping center

market, not the grocery market, and that Jewel could be found

liable for monopolistic conduct in this market only onatheory of

conspiracy. Again, because there was insufficient evidence of a

conspiracy, we granted summary judgment as to Section 2 as

well. However, Section 2, unlike Section 1, does not itself

require proof of a conspiracy. Thus, plaintiffs’ lack of standing

under the Clayton Act to sue Jewel for monopolizing the grocery

market does not mean thata violation of Section 2 of the Sherman

Act has not occurred; it means only that plaintiffs are not the

appropriate parties to bring a civil action for antitrust remedies

on the basis of such a violation. Nor does plaintiffs’ lack of

antitrust standing mean that they lack standing as parties to the

lease to sue for breach of a lease provision relating to violations

of the law, arguably including violations of Sherman Antitrust

Act Section 2.'° But because of their position that plaintiffs lack

10. Defendants might argue that because plaintiffs lack standing to sue

for the underlying antitrust violations, plaintiffs also lack standing to sue for

breach of the unlawful use covenant based on these antitrust violations.

However, plaintiffs’ standing as lessors to sue on the lease is independent of the

question of standing to sue on the underlying violations. For example, even

though a lessor lacks standing to prosecute his tenant for operation of a drug

dealership or gambling ring on the leased premises under the criminal code, he

could sue for breach of an unlawful use covenant in the lease. Indeed, defendants

appear to concede that plaintiffs have standing to bring exactly this type of suit.

Defendants’ Memorandum at 23. Applying similar reasoning, we believe

plaintiffs have standing to sue for breach of the lease based on their tenant’s

alleged illegal antitrust behavior.

60a

Appendix B

standing to bring an antitrust suit on this basis, defendants have

not even addressed the question of whether there is sufficient

evidence that Jewel illegally monopolized the grocery market in

violation of Section 2. For purposes of considering defendants’

motion regarding the breach of lease claim, and in the absence of

contrary arguments by defendants, we assume that there is

sufficient evidence of monopolistic conduct in the grocery

market by Jewel in violation of Section 2.

We must next consider whether this type of illegal act was

the type of act contemplated by the language of the lease

prohibiting the use of the premises for unlawful purposes.

Neither party has offered much case law to guide our

interpretation of this language. The only relevant case cited is

Deutsch v. Phillips Petroleum Co., 128 Cal. Rptr. 497, 498 (Cal.

App. 2d Dist. 1976). In Deutsch, the Court of Appeals of

California interpreted a lease provision somewhat similar to

sentence 2 of paragraph 1 of the Jewel lease, and concluded that

the alleged antitrust violations did not constitute a breach of the

lease. However, the California court’s analysis rested primarily

on language which is not present in the provision of the Jewel

lease regarding unlawful use. The Deutsch lease stated that the

lessee “shall conduct its business on the said demised premises

in conformity with all State or Federal Statutes and Municipal

Ordinances applicable thereto . . . .” Jd. at 499. The California

court made much of the concluding words “applicable thereto,”

which it found to modify the word “premises.” Based on this

wording, the Deutsch court concluded that a breach of this

provision of the lease could result only from a violation of a

statute directly “applicable to the premises,” and that the

antitrust violation in question did not meet this requirement

because it had no significant relation to the premises. Jd. at 500-

501. The court further noted that the purpose of such a provision

6la

Appendix B

was to “ensure[] that the lessee will harm neither the physical

attributes nor the reputation of the property.” /d. at 501.

The Jewel lease, unlike the lease described in Deutsch, has

two separate sentences dealing with use of the premises, the first

restricting unlawful use and the second dealing with compliance

with various laws relating to the premises. It is sentence 2 which

corresponds to the lease provision at issue in Deutsch. However,

plaintiffs’ claim of breach of lease is based primarily on sentence

1’s prohibition of unlawful use, and not sentence 2’s requirement

of compliance with the requirements of various governmental

authorities. Thus, the Deutsch holding is on point here only

insofar as sentence | of the Jewel lease is similar in language and

purpose to sentence 2 and the analogous Deutsch provision.

There is no reason to believe that sentence | of the Jewel lease is

merely an introduction to or duplication of sentence 2; more

likely, it has a separate and somewhat different focus from

sentence 2. Otherwise, its presence in paragraph 1 would be

redundant and somewhat meaningless. Moreover, by contrast to

the disputed provision in the Deutsch lease, sentence 1 of the

Jewel lease is a general provision prohibiting the use of the

premises “for any unlawful purpose.” Sentence | of the Jewel

lease has noclause restricting its application to laws “applicable

to the premises,” and thus, we believe that breaches of this

provision, unlike the Deutsch provision, need not necessarily

involve violations of laws directly related to the premises. We

find that sentence | is not analogous to the provision at issue in

the Deutsch lease, and accordingly, we decline to follow the

ruling in Deutsch.

In a further attempt to escape the application of sentence 1,

defendants argue that this provision relates to the use of the

premises only for such activities as prostitution, drug-dealing, or

62a

Appendix B

gambling. While it is true that these activities might be more

traditionally and typically characterized as “criminal” or

“illegal,” as compared to antitrust conduct, defendants have

offered no evidence to support their narrow interpretation of

“unlawful purpose.”

In light of the unambiguous," broad and non-restrictive

wording of sentence 1, we conclude that use of the leased

premises in furtherance of a Section 2 antitrust violation could

indeed constitute a breach of the lease. Thus, we deny the motion

for summary judgment on the claim of breach of lease in Count

IV insofar as it is based on the illegal use provision of the lease.

B. Continuous Operation

Plaintiffs also argue that by acting to keep the premises

vacant, Jewel has breached paragraph 28 of the lease, which

provides that “Lessee shall use the leased premises only for the

operation of a grocery supermarket.” Plaintiffs contend that the

requirement in paragraph 28 that the premises be used “only for

the operation of a grocery” implies that the premises must be

occupied and used, as opposed to left dark and vacant. In other

words, plaintiffs infer into paragraph 28 a continuous use

requirement although one is not expressly provided.

However, not only does paragraph 28 not expressly require

continuous use, but elsewhere, the lease actually anticipates a

situation of extended vacancy and contains express provisions to

11. If there were any ambiguity, we would follow the general rule of

contract interpretation which requires courts to construe an ambiguity against

the drafter. However, there is no evidence as to which party drafted the lease at

issue in this case.

63a

Appendix B

address just these circumstances. In paragraph 17, the lease

provides that in addition to a minimum base rental, “lessee

covenants to pay as percentage rental an amount equal to one per

cent (1%) ofall sales in excess of four million four hundred forty

thousand and no/100 — Dollars . . . made in or from the leased

premises per lease per year.” Paragraph 17 further states that

“[t]}he obligation to pay percentage rental shall not be deemed to

require Lessee to conduct business on the leased premises nor to

operate its business so as to produce percentage rental.”

Also directly relevant is paragraph 30, which provides that

“(ijn the event that the Lessee allows the leased premises to

remain vacant or fails to open for business for a period of sixty

(60) consecutive days or more during the term, Lessee shall for

the purpose of calculating the percentage rental be deemed

during each week that it is not open for business. . .to have made

sales in an amount equal to the amount of the average sales per

week made during the three (3) years prior to such time.”

Because paragraphs 17 and 30 explicitly and specifically

address the situation of extended vacancy and inoperation, these

two paragraphs override any suggestion that a continuous use

requirement might be inferred from the “use for operation as a

grocery” provision in paragraph 28. Thus, it is clear from the

express language of the lease that Jewel’s behavior regarding its

leased premises at the Grove Mall is well within its rights under

the lease.

Plaintiffs cannot avoid this harsh result by resort to the

covenant of good faith and fair dealing. Acovenant to deal fairly

and in good faith is implied in every contract in Illinois, Beraha

v. Baxter Health Care Corp., 956 F.2d 1436, 1443 (7th Cir. 1992)

(citing Martindell v. Lake Shore Nat’l Bank, 154 N.E.2d 683

64a

Appendix B

(1958)), including property leases. See, e.g., Abbott v. Amoco

Oil, 619 N.E.2d 789, 798 (Ill. App. 2nd Dist. 1993), appeal

denied, 624 N.E.2d 804 (1993); P.M.C. v. Ekstein, No.91 C3709,

1992 U.S. Dist. Lexis 7306, *6 (N.D. Ill. May 13, 1992).

However, the implied covenant of good faith and fair dealing is

not an independent source of duties for either party to acontract.

Beraha, 956 F.2d at 1443. Rather, it is an interpretive rule of

construction, which “ ‘comes into play in defining and

modifying duties which grow out of specific contract terms and

obligations.’ ” Jd. (citing Gordon v. Matthew Bender & Co., 562

F. Supp. 1286, 1289 (N.D. Ill. 1983)). The covenant, then, is

merely “an estimate of ‘what parties would agree to if they

dickered about the subject explicitly.’ " Continental Bank, N.A.

v. Everett, 964 F.2d 701, 705 (7th Cir. 1992) (quoting Jordan v.

Duff & Phelps, 815 F.2d 429, 435-36 (7th Cir. 1987)), cert.

denied, 113 S.Ct. 816 (1992). The covenant is thus used to fill

contractual gaps. Where the disputed issr~ in a contract is

governed by express terms, however, there is. 10 gap to be filled,

and the parties’ behavior is assessed according to the express

provisions, without resort to an implied covenant of good faith

and fair dealing. Continental, 964 F.2d at 705. Unfortunately for

plaintiffs, this is just such a situation. The express language of

paragraphs 17 and 30 leaves noroom for the implied covenant of

good faith and fair dealing to step in. Serfecz has inherited a

highly unfavorable lease, and we cannot rewrite the contract

now.

Defendants’ motion for summary judgment on the claim of

breach of lease in Count IV must be granted insofar as it is based

on Jewel’s failure to continue operating or release its space at the

Grove Mall.

65a

Appendix B

IV. The Malicious Prosecution Claim

In February 1990, Serfecz learned that Jewel was in the

process of negotiating a sublease with United Skates. To prevent

the proposed sublease, Serfecz changed the jocks to the facility.

Jewel then brought a declaratory judgment action against

Serfecz in state court regarding its right to sublease its premises

to United Skates. Plaintiffs maintain that the lawsuit was devised

solely for the purpose of harassing and intimidating Serfecz and

his attorneys, and otherwise interfering with Serfecz’s efforts to

redevelop the Grove Mall. Accordingly, in Count III of their

complaint, plaintiffs charge Jewel with malicious prosecution.

“Actions for malicious prosecution of acivil proceeding are

not favored in Illinois on the ground that courts should be open

to litigants for resolution of their rights without fear of

prosection for calling upon the courts to determine their rights.”

Keefe v. Aluminum Co. of America, 519 N.E.2d 955, 956 (III.

App. Ist Dist. 1988), appeal denied, 526 N.E.2d 831 (1988).A

malicious prosecution claimant must prove the following five

elements:

(1) Institution and prosecution of judicial proceedings by

the defendant;

(2) Lack of probable cause for those proceedings;

(3) Malice in instituting the proceedings;

(4) Termination of the prior cause in plaintiff’s favor; and

(5) Suffering by plaintiff of some special injury, beyond the

anxiety, loss of time, attorney fees and necessity for

66a

Appendix B

defending one’s reputation which are the common

incidents of most lawsuits.

Id.

There is no question in the present case as to proof of

elements (1) and (4), regarding institution and prosecution of

judicial proceedings and termination of the suit in plaintiffs’

favor. Additionally, we find that plaintiffs have sufficient

evidence to create a factual dispute as to the third element,

malicious intent, especially given the requirement that on

summary judgment the court must view all inferences in the light

most favorable to the nonmoving party. See Regner v. City of

Chicago, 789 F.2d at 536. In support of their interpretation of

events, plaintiffs point to Jewel's misconduct during discovery

in the state court suit, implying that Jewel’s dilatory discovery

tactics were intended primarily to exacerbate the harassment

suffered by plaintiffs as a result of the litigation. Plaintiffs also

note that prior to trial in the state court action, Jewel rejected

Serfecz’s offer to pay Jewel the same rent it would have received

from United Skates, a decision by Jewel which further implies

that Jewel’s true goal in bringing suit was not to sublet to United

Skates and earn rental income but to harass Serfecz. Paragraph

31 of the Jewel lease states that “[n]o sublease shall be made...

which increases the insurance rates with respect to the leased

premises without Lessor’s written consent.” A major focus of the

lawsuit concerned the impact that the subtenancy of a roller rink

and games arcade would have had on the Grove Mall’s property

insurance rates. Plaintiffs point to evidence that despite the

importance of the insurance issue, Jewel’s primary witness had

no idea what the effect on insurance rates would be. This

ignorance on Jewel’s part suggests a lack of preparation and

investigation. Plaintiffs also note that Jewel waived its right to

67a

Appendix B

use an insurance expert. This evidence further supports

plaintiffs’ position that the lawsuit was merely a “sham” brought

primarily for purposes of harassment and intimidation.

Probable cause in the context of a malicious prosecution

claim means the existence of facts “that would lead a person of

ordinary caution and prudence to believe that he hada justifiable

claim.” Keefe, 519 N.E.2d at 956. We find that plaintiffs have

sufficient evidence to support a finding of lack of probable

cause, the second element of malicious prosecution. At trial, the

state court directed a finding for Serfecz, concluding that Jewel

had presented no evidence to support its case. Plaintiffs’

Response, Exhibits (Jewel v. Serfecz, No. 90 CH 7124, (Circuit

Court of Cook County 7/13/90)). The appellate court affirmed

the trial court, noting that Jewel has presented “no competent

testimony” regarding the insurance rates. Plaintiffs’ Response,

Exhibit 5 (Jewel v. Serfecz, No. 1-90-2576, (Ill. App. Ist Dist.

May 31, 1991). We agree with plaintiff that the fact that Jewel did

not thoroughly research or present evidence on the insurance

question supports an inference that it lacked probable cause to

believe that it would win the case.

Defendants note that Jewel succeeded in its quest for a

temporary restraining order (“TRO”) against plaintiffs, and

argue that as a matter of law, this preliminary success

conclusively establishes probable cause. In Keefe, the court held

that acivil judgment entered by the circuit court would constitute

conclusive evidence of probable cause, even though that

judgment was subsequently reversed on appeal. 519 N.E.2d at

956. The Illinois Appellate Court said nothing, however, about

the evidentiary impact of the issuance of aTRO. While obviously

a grant of aTRO would be some evidence of probable cause, we

do not believe it to have the same per se conclusive weight asa

68a

Appendix B

final judgment by the trial court, presumably reached after a

period of more careful and thorough consideration of all the

issues than is typical at the TRO stage of litigation. Moreover,

defendants have not presented much information regarding the

nature of the TRO that was issued. We know only that Serfecz

attempted to oust Jewel from the premises by changing the locks,

and that as a result of the TRO, Jewel regained control of the

property it leased in the Grove Mall. The mere fact that the trial

court concluded that Jewel was entitled to access to its leased

property does not conclusively establish that Jewel had probable

cause to believe that it was entitled to a declaratory judgment

regarding its right to sublet to United Skates. Thus, we conclude

that there remains a material factual dispute on the issue of

probable cause.

Finally, we consider the element of special injury.

Defendants argue that plaintiffs have failed to present evidence

of some unique injury, such as seizure of property or personal

arrest, that differs from the usual stresses and demands inherent

in defending a law suit. The Illinois Appellate Court explained in

Equity Assoc. v. Village of Northbrook, 524 N.E.2d 1119 (Ill.

App. Ist Dist. 1988), appeal denied, 530 N.E.2d 243 (1988), that

special injury involves interference with property so gre

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