PHILADELPHIA – Wawa and other defendants have won dismissal of a New Jersey developer’s anti-trust litigation against a Pennsylvania competitor, which claimed the latter conspired to prevent the development of a major retail project featuring the Royal Farms Convenience Store in the vicinity of a Merck headquarters.
Upper Gwynedd Equities, LLC, and Retail Sites, LLC of Maple Shade, N.J. first filed suit in the U.S. District Court for the Eastern District of Pennsylvania on June 12, 2020 versus Provco Pinegood Sumneytown, LLC, Gerald Holtz, Provco Group, LLC, The Provco Group, Ltd., Provco Ventures I, L.P., Provco Real Estate, all of Villanova, Wawa, Inc. of Media, Bruce Goodman of Jenkintown, ABC Entities 1-5 and John Does 1-10.
“It is a claim for attempted monopolization of neighborhood retail projects (NRPs) with multiple commercial uses and tenants, in this instance, one use of which is a hyper-convenience store market and the hyper-convenience store real estate site market in Upper Gwynedd Township, Montgomery County, Pennsylvania, at and near the intersection of Sumneytown Pike and Church/Road West Point Pike,” the suit stated.
NRPs usually consist of one or more buildings with multiple tenants and uses, which are anchored by a key retail tenant such as a hyper-convenience store, supermarket, pharmacy and/or restaurant, and which benefit from the frequent shopping trips generated by each use in the project and predominantly, the continual high volume of customers attracted to the anchor tenant.
The location selected by the plaintiffs is just minutes away from Merck’s pair of West Point Campuses, which collectively employ about 12,500 people. According to the litigation, that statistic makes them both the largest employer in Upper Gwynedd Township, as well as Montgomery County.
However, the plaintiffs claimed the defendants have conspired to “hinder, delay or stop Upper Gwynedd Equities’s NRP, to prevent UGE from leasing space in its NRP to tenants and to interfere with UGE’s lease agreement with its tenant, Royal Farms, a direct competitor in these markets with defendants Provco Group, Provco and its client and its tenant, Wawa.”
The plaintiffs alleged the defendants’ actions are also meant to harm UGE and prevent it from leasing to its other prospective tenants and to exclude UGE and its tenant, Royal Farms, from the NRP and hyper-convenience store real estate site markets.
The plaintiffs claimed the defendants have done this through the use of a series of sham litigations, conspiracy in restraint of trade, other anti-competitive acts and tortious conduct, meant to both prevent the construction and development of a Royal Farms Store and protect a competing NRP featuring Wawa and CVS stores owned and operated by the defendants, just over 1 mile from the target site.
U.S. District Court for the Eastern District of Pennsylvania Judge John M. Younge granted a motion to stay discovery on July 27, 2020, a stay that was lifted on Dec. 22, 2020. After an amended complaint was filed on Jan. 29, 2021, Wawa filed a motion to dismiss that new complaint on Feb. 26, 2021.
In that motion, Wawa (and later, the remaining defendants) argued that the plaintiffs’ claims were barred by the Noerr-Pennington doctrine, which creates immunity for legitimate petitioning conduct directed at a branch of government.
“This is not truly an antitrust case at all, but rather a garden-variety business dispute between two real estate developers that has nothing to do with competition in the market for convenience stores or any harm to consumers of those stores,” read the dismissal motion, in part.
PPS argued that UGE, as the applicant for a conditional use exception, bore the burden to show that its proposed multiple uses for the buildings in the shopping center would be compatible with one another. But UGE took the opposite view, contending that PPS bore the burden to prove the proposed uses were incompatible with one another.
“Further undermining plaintiffs’ efforts to transform this business dispute into an antitrust case about harm to competition in the so-called hyper-convenience store market, the construction of a Royal Farms store in the shopping center was not the focus of the conditional use appeal because that use was disclosed, unlike the uses of the other buildings,” the dismissal motion stated.
Wawa feels that the case has no place in federal court and the case should be dismissed.
“The amended complaint focuses on economic harm the plaintiff developer claims to have suffered as a result of Provco Pinegood Sumneytown’s allegedly retaliatory lawsuits, as opposed to any harm to consumers or competition more generally. In any case, PPS’s zoning challenges easily pass muster under the standard set by the Supreme Court and rigorously applied in this Circuit for sham litigation, as well as the test for serial petitioning. For these reasons and others, plaintiffs’ federal antitrust claims and their state law claims all fail as a matter of law. The Court should grant defendants’ motion to dismiss.”
UPDATE
After more than a year-and-a-half of sustained litigation with little forward movement at the federal court level, Younge granted the defense’s dismissal motion, in a Nov. 10 memorandum opinion.
“Without knowing all Upper Gwynedd’s intended uses, Provco had a legitimate concern that Upper Gwynedd’s development project could negatively impact Provco’s neighboring property. Provco also had a reasonable and legitimate legal argument for objecting to Upper Gwynedd’s development because the combination of some of Upper Gwynedd Township Zoning Ordinance Section 195-22.A’s permitted single uses, such as a gas pumping station, a medical marijuana dispensary, and a religious institution, all on a single parcel, could be viewed as ‘incompatible’ depending on the court’s interpretation of that term,” Younge said.
“Indeed, the ordinance lists a wide variety of uses, and the evidence establishing incompatibility with one use, might not be the same evidence of incompatibility for another. Therefore, a reasonable litigant reading the ordinance, could come to the same interpretation as Provco, and conclude that there was a real chance it could succeed on the merits of its challenge if the burden was laid upon Upper Gwynedd to show which uses it intended and if those uses together, were compatible.”
Younge explained that the litigation “does not become objectively baseless due to Provco appealing two Upper Gwynedd Township Zoning Board determinations, related to the same Upper Gwynedd development.”
“For Upper Gwynedd to build its proposed development, it sought two different approvals – a conditional use and a final development application – so if there were two challenges, it was because that was what the process entailed for Provco to object and protect all of its legal rights. Provco further had a legal basis to argue the Board’s approval of Upper Gwynedd’s final development application was at odds with the Board’s denial of Provco’s final development application and thus, constituted an abuse of discretion,” Younge said.
“Regardless, both appeals overlapped at the same time, so it is a stretch to say that Upper Gwynedd was dragged into serial, objectively baseless challenges designed only to drag out and thwart its development project. Therefore, the Court grants defendants’ motion to dismiss as plaintiffs have failed to plausibly allege sham litigation and it cannot meet the pleading burden to strip defendants of immunity pursuant to the Noerr-Pennington doctrine.”
The plaintiffs were represented by Christopher M. McMonagle and Eric B. Smith of Timoney Knox, in Fort Washington.
The defendants were represented by Barbara T. Sicalides of Troutman Pepper Hamilton Sanders, plus Edward D. Rogers, Leslie E. John, Emilia L. McKee Vassallo and Thomas J. Gallagher IV of Ballard Spahr, all in Philadelphia.
U.S. District Court for the Eastern District of Pennsylvania case 2:20-cv-02819
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com