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Powell v. Shelton

United States District Court, W.D. Kentucky, Bowling Green Division

May 9, 2019

VALERIE POWELL, Administratrix of the Estate of Lenita Cole PLAINTIFF



         This matter is before the Court on Defendants' Motion to Dismiss (DN 6). The motion is ripe for decision. For the reasons provided below, the motion is GRANTED.

         I. BACKGROUND

         This is an action arising under the Sherman Antitrust Act (“the Sherman Act”), 15 U.S.C. § 1 et seq., concerning Defendants' alleged conduct at the public auction for the Estate of Lenita Cole (“the Estate”) held on April 21, 2018, for real property located in Scottsville, Kentucky. (Compl. ¶¶ 3-6, DN 1). Plaintiff Valerie Powell (“Plaintiff”), who is the daughter of Lenita Cole and Administratrix of the Estate, alleges that “during the course of the auction, Defendants recognized that there was only one (1) competing bidder, namely Chris Shockley [(“Shockley”)] who was bidding on behalf of his farm partnership.” (Compl. ¶ 8). Plaintiff claims that Defendant Barry Dyer (“Dyer”) approached Shockley and demanded that Shockley pay Defendants $40, 000 or else they would continue bidding on the property. (Compl. ¶ 8). Shockley and his farming partner, Jason Williams (“Williams”), allegedly agreed to pay $40, 000 to acquire the property free of competing bids from Defendants. (Compl. ¶ 9). Shockley and Williams ultimately paid $492, 200 for the property upon placing the highest bid at the auction. (Compl. ¶ 10).

         Afterward, “the [E]state investigated the matter and concluded that it was deprived of $158, 200 as a result” of Defendants' conduct. (Pl.'s Resp. 2). Plaintiff reaches this conclusion because “Shockley and Williams were prepared to pay up to . . . $650, 400” for the property, compared to the $492, 200 they ultimately paid. (Compl. ¶ 10). As a result, Plaintiff alleges that she and her brother-who is also a beneficiary of the Estate and a resident of Tennessee-were each deprived of $79, 100. (Pl.'s Resp. 2).

         Plaintiff initiated the present action pursuant to 15 U.S.C. § 15 seeking to recover treble damages as well as reasonable attorneys' fees and litigation costs.[1] (Compl. ¶¶ 12-13). Defendants move to dismiss Plaintiff's Complaint on two grounds. First, Defendants argue the Court lacks subject matter jurisdiction because “Plaintiff must establish a nexus between [Defendants'] conduct and interstate commerce in order to bring a Sherman Act violation case.” (Defs.' Mot. Dismiss 2, DN 6). Since the Estate was being probated in Kentucky, and because Defendants, Plaintiff, Shockley and Williams are all residents of Kentucky, Defendants “request this Court to dismiss this case for lack of subject matter jurisdiction [because] the transaction . . . was purely intrastate and did not have a substantial impact on interstate commerce.” (Defs.' Mot. Dismiss 3). Second, Defendants contend Shockley and Williams are indispensable parties to this action under Fed.R.Civ.P. 19(a)(1) whose non-joiner warrants dismissal. (Defs.' Mot. Dismiss 3-4).

         In her response, Plaintiff asserts that Defendants' conduct affects interstate commerce “given that the beneficiary residing in Tennessee was deprived of $79, 000 or more as a result of Defendants' wrongdoing.” (Pl.'s Resp. Defs.' Mot. Dismiss 4, DN 8 [hereinafter Pl.'s Resp.]). Regarding Defendants' motion to join Shockley and Williams as indispensable parties, Plaintiff argues “Defendants have merely made conclusory statements unsupported by any specific facts or legal arguments” and “the law is clear that potential joint tortfeasors are only permissive parties.” (Pl.'s Resp. 6).


         Motions to dismiss for lack of subject matter jurisdiction under Fed.R.Civ.P. 12(b)(1) fall into two categories: facial attacks and factual attacks. United States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). Facial attacks challenge subject matter jurisdiction as to the sufficiency of the pleadings, and a Court will consider the material allegations in the complaint as true and construe them in the light most favorable to the nonmoving party. Id. Factual attacks challenge subject matter jurisdiction as to the facts alleged in the pleadings, and in such situations, courts weigh conflicting evidence and resolve factual disputes in determining whether there is jurisdiction. Id. “Subject matter jurisdiction is always a threshold determination.” Am. Telecom Co. v. Republic of Lebanon, 501 F.3d 534, 537 (6th Cir. 2007) (citation omitted). In most circumstances, the plaintiff bears the burden to survive Fed.R.Civ.P. 12(b)(1) motions to dismiss. See Bell v. Hood, 327 U.S. 678, 681-82 (1946). “If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.” Fed.R.Civ.P. 12(h)(3).


         Because Defendants challenge the Court's subject matter jurisdiction over Plaintiff's claim based on the sufficiency of her pleadings, this is a facial attack. See Ritchie, 15 F.3d at 598. The Court will accordingly consider the material allegations in Plaintiff's Complaint as true and construe them in her favor. See id.

         Section 1 of the Sherman Act provides: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal.” 15 U.S.C. § 1. In conjunction with this, Congress has created a private cause of action for “any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws. . . .” 15 U.S.C. § 15(a). To state such a private cause of action, Plaintiffs must plead facts demonstrating three elements: “(1) the existence of a contract, combination, or conspiracy (2) affecting interstate commerce (3) that imposes an unreasonable restraint on trade.” Churchill Downs Inc. v. Thoroughbred Horsemen's Grp., LLC, 605 F.Supp.2d 870, 887 (W.D. Ky. 2009) (citations omitted).

         In this action, Plaintiff has alleged an oral contract formed between Defendants and Shockley in satisfaction of the first element. Plaintiff has also made allegations that satisfy the third element because she accuses Defendants of bid rigging-a practice which has long been barred as an unreasonable, horizontal restraint on trade and a per se violation of Section 1 of the Sherman Act. See, e.g., Expert Masonry, Inc. v. Boone Cty., Ky., 440 F.3d 336, 344 (6th Cir. 2006) (citations omitted); United States v. W.F. Brinkley & Son Constr. Co., 783 F.2d 1157, 1161 (4th Cir. 1986) (“[W]here two or more persons agree that one will submit a bid for a project higher or lower than the others or that one will not submit a bid at all, then there has been an unreasonable restraint on trade which violates the Sherman Antitrust Act.”); United States v. Koppers Co., 652 F.2d 290, 294 (2d Cir. 1981) (“[I]n cases involving behavior such as bid rigging, which has been classified by courts as a per se violation, the Sherman Act will be read as simply saying: ‘“An agreement among competitors to rig bids is illegal.”'” (citation omitted)).

         In their motion, Defendants do not challenge Plaintiff's allegations under either the first or third prongs but focus instead on the second. Thus, the disputed issue presently before this Court is whether Plaintiff has alleged facts indicating that Defendants' alleged bid rigging conspiracy affected interstate ...

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