Brandywine Village Associates v. Carlino East Brandywine, L.P. et al

AMENDED COMPLAINT with EXHIBITS against CARLINO EAST BRANDYWINE, L.P., EAST BRANDYWINE TOWNSHIP, GIANT FOOD STORES, LLC, KATHERINE M. KETTLETY, CHRISTINA B. WATTERS, FRANK E. WATTERS, JR, THOMAS R. WATTERS, filed by BRANDYWINE VILLAGE ASSOCIATES.

Eastern District of Pennsylvania, paed-5:2016-cv-05209

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19 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA: BRANDYWINE VILLAGE: ASSOCIATES,:: Plaintiff:: v.: Civil Action No. 5:16-cv-05209-JLS: CARLINO EAST BRANDYWINE,: Jury Trial Demanded L.P.; GIANT FOOD STORES, LLC;: EAST BRANDYWINE TOWNSHIP;: CHRISTINA B. WATTERS and: KATHERINE M. KETTLETY, in their: individual capacities and as: co-administrators of the Estates of Frank: and Beatrice Watters; FRANK E.: WATTERS, JR.; and THOMAS R.: WATTERS,:: Defendants:: VERIFIED FIRST AMENDED COMPLAINT 19 TABLE OF CONTENTS INTRODUCTION ...........................................................................................................................1 PARTIES .......................................................................................................................................10 JURISDICTION AND VENUE ....................................................................................................11 THE RELEVANT ANTITRUST MARKET.................................................................................12 THE DEVELOPMENT OF BRANDYWINE VILLAGE SHOPPING CENTER .......................21 DEFENDANTS' PREDATORY PLAN TO DEVELOP A GIANT SUPERMARKET ON THE WATTERS PROPERTY AND STIFLE COMPETITION ............................................25 CARLINO'S AND GIANT'S VEILED THREATS AGAINST BRANDYWINE VILLAGE AND EXPRESSED INTENTION TO ELIMINATE COMPETITION BY ACQUIRING BRANDYWINE VILLAGE SHOPPING CENTER .......................................26 THE GIANT-ENGINEERED CLOSURE OF EAST BRANDYWINE TOWNSHIP'S ONLY SUPERMARKET .....................................................................................29 BRANDYWINE VILLAGE'S UNSUCCESSFUL EFFORTS TO RECRUIT A NEW SUPERMARKET ANCHOR TENANT .......................................................34 CARLINO'S INVASIVE AND DEFECTIVE LAND DEVELOPMENT PLANS .....................35 THE TOWNSHIP'S COLLUSION WITH CARLINO TO ABUSE THE POWER OF EMINENT DOMAIN TO CONFER A PRIVATE BENEFIT ON CARLINO AND GIANT BY UNDERMINING BRANDYWINE VILLAGE SHOPPING CENTER .........41 CARLINO'S PREDATORY AND BASELESS LITIGATION AGAINST BRANDYWINE VILLAGE AND ASSOCIATED PARTIES .....................................................52 CARLINO'S FALSE AND MISLEADING ADVERTISING DEPICTING BRANDYWINE VILLAGE SHOPPING CENTER AS CARLINO'S PROPERTY ...................54 COUNT I – AGAINST ALL DEFENDANTS – AGREEMENTS TO RESTRAIN TRADE IN VIOLATION OF SECTION 1 OF THE SHERMAN ACT, 15 U.S.C.§ 1 ................56 COUNT II – AGAINST ALL DEFENDANTS – UNFAIR COMPETITION..............................58 COUNT III – AGAINST CARLINO – ABUSE OF PROCESS ...................................................59 COUNT IV – AGAINST THE INDIVIDUAL DEFENDANTS AND CARLINO – SPECIFIC PERFORMANCE ........................................................................................................61 i 19 TABLE OF CONTENTS (CONTINUED) COUNT V – AGAINST THE INDIVIDUAL DEFENDANTS – BREACH OF CONTRACT...........................................................................................................63 PRAYER FOR RELIEF ................................................................................................................64 JURY DEMAND ...........................................................................................................................67 -ii- 19 For its First Amended Complaint, Plaintiff Brandywine Village Associates ("Brandywine Village") alleges as follows: INTRODUCTION 1. This action arises from Defendants' concerted predatory efforts to suppress competition in the supermarket industry in and near East Brandywine Township, Chester County, Pennsylvania, by undermining and destroying a shopping center owned by Brandywine Village in order to illegally suppress competition for a planned shopping center that some of the Defendants intend to build directly next door to Brandywine Village's long-existing shopping center ("Brandywine Village Shopping Center") in East Brandywine Township, Chester County, Pennsylvania. 2. Defendants have unlawfully conspired to harm supermarket competition and the consuming public, as well as to injure Brandywine Village, by using illegal means – and not merely sharp or aggressive business tactics – to interfere with Brandywine Village Shopping Center's business operations and cause the permanent closure of its anchor tenant, the only supermarket in East Brandywine Township, leaving local residents without an easily accessible supermarket and Brandywine Village Shopping Center without an anchor tenant for more than a year and a half. As of the date of this filing, the more than 7,600 (and increasing) residents of East Brandywine Township remain without an easily accessible supermarket as a result of Defendants' predatory scheme. 3. For many years from 1995, a supermarket operated continuously and successfully as the anchor tenant at Brandywine Village Shopping Center. The supermarket was originally owned by the Cropper family and run as "Croppers' Market." Later, after changes of ownership, the supermarket operated under the name "Stauffer's Market." The supermarket shut down in -1- 19 September 2015 in substantial part because of the unlawful conduct of Defendants, who have planned for years to build a competing supermarket next door. Since then, Brandywine Village has been unable to secure a replacement anchor supermarket or other anchor tenant for Brandywine Village Shopping Center, despite diligent efforts to do so. 4. Defendants have engaged, and continue to engage, in their anticompetitive conduct because of plans to build another shopping center, directly next door to Brandywine Village Shopping Center, that will feature a new Giant supermarket as its anchor tenant. Driving Brandywine Village Shopping Center's previous supermarket from the market, and preventing Brandywine Village from attracting another supermarket as an anchor tenant, suppresses competition for Giant. 5. Defendant Carlino East Brandywine, L.P. ("Carlino"), a property developer, is motivated to suppress competition in the supermarket market by inflicting harm on Brandywine Village because Carlino stands to gain financially from building a new supermarket for Defendant Giant Food Stores LLC ("Giant") on the undeveloped property adjoining Brandywine Village Shopping Center. It was, and is, in Giant's interest not to have a competing supermarket in operation directly next door. Further, Carlino has repeatedly expressed interest in acquiring Brandywine Village Shopping Center outright, and engaging in predatory and exclusionary practices to undermine and reduce the value of Brandywine Village Shopping Center is consistent with that ultimate goal. 6. Carlino's anticompetitive and conspiratorial acts have included, at a minimum: a. knowingly seeking and obtaining hasty municipal approval of multiple defective land use plans that violate applicable land use laws and regulations and improperly interfere with Brandywine Village's property rights and the property rights of other neighboring -2- 19 landowners; b. commencing an objectively baseless sham lawsuit against Brandywine Village and related parties – including Brandywine Village's individual partners and outside counsel – for anticompetitive purposes; c. conducting secret property development negotiations with defendant East Brandywine Township (the "Township"), thereby inducing the Township to violate the Sunshine Act and the Municipalities Planning Code repeatedly, to Brandywine Village's detriment; d. inducing the Township, through threats of sham litigation, to improperly exercise its eminent domain power in violation of Pennsylvania law primarily for Carlino's private benefit and to Brandywine Village's detriment, and as a means of circumventing valid, enforceable, and valuable easements that benefit Brandywine Village; e. actively and baselessly opposing Brandywine Village's efforts to enlarge its existing retail space to improve its ability to attract a new anchor supermarket tenant to the Brandywine Village Shopping Center; f. causing the predatory publication of literally false and misleading advertisements representing and/or implying that Carlino owns and has the right to dispose of Brandywine Village's property and the property of another neighboring landowner; 7. Defendant Giant is motivated to inflict harm on Brandywine Village through the exclusionary and predatory practices detailed herein because it stands to gain financially from opening a new Giant supermarket next to Brandywine Village Shopping Center without having to compete with an existing supermarket in the relevant geographic market. Giant, directly and through Carlino, made repeated illegal attempts to ensure that the long-time supermarket anchor tenant at Brandywine Village Shopping Center would close permanently no later than the time -3- 19 when the new Giant store at Carlino's planned development is ready to open. As matters turned out, Giant was able, through its relationship with a major grocery wholesaler that gained control of the Brandywine Village Shopping Center supermarket lease in late 2014, to ensure that Brandywine Village Shopping Center's supermarket anchor tenant went permanently dark long before the new Giant supermarket was ready to open. 8. Giant's anticompetitive, conspiratorial, predatory, and exclusionary acts have included, at a minimum: a. Making, or inducing Carlino to make, illegal offers to enter into anticompetitive agreements with Brandywine Village to eliminate supermarket competition in the relevant market; b. actively insisting upon and financially subsidizing the construction of a through-road that will inflict competitive harm on Brandywine Village and stifle supermarket competition in the relevant market – even when Carlino and East Brandywine Township were prepared to proceed without such a road; c. scheming so that one of Giant's major wholesale suppliers, which also held the lease to the supermarket space at Brandywine Village Shopping Center, would act against its own economic interest by declining to renew that lease, causing Brandywine Village's competitive supermarket space to become vacant; d. expressly encouraging and agreeing with its business partner, Carlino, to engage in the specific anticompetitive and predatory conduct outlined above in paragraph 6, including Carlino's conduct relating to the land development plans, the sham tort action, and the objectively baseless condemnation proceeding; and e. in conjunction with Carlino, actively investigating Brandywine Village's -4- 19 financial health to assess the impact of Giant's anticompetitive scheme, with a view toward Carlino's ultimate acquisition of Brandywine Village Shopping Center after its economic value has been undermined, thereby eliminating any possibility of supermarket competition from the neighboring parcel. 9. Defendant East Brandywine Township (the "Township") is motivated to inflict harm on Brandywine Village by Carlino's stick-and-carrot approach of making repeated threats to sue the Township if the Township did not act in accordance with Carlino's wishes and, simultaneously, promising in writing to reimburse the Township and its Supervisors for any costs or liability the Township or Supervisors may incur in litigation with Brandywine Village. 10. The Township's anticompetitive, conspiratorial, exclusionary, and predatory acts have included, at a minimum: a. engaging in secret negotiations with co-conspirator Carlino, in repeated violation of the Pennsylvania Sunshine Act and the Municipalities Planning Code, to help develop Carlino's and the Individual Defendants' property at the expense of Brandywine Village; b. making official decisions that adversely affect Brandywine Village, in collusion with Carlino and at Carlino's behest, without affording Brandywine Village required notice or an opportunity to be heard; c. in collusion with Carlino, imp