Simon Says Mall Monopolization Claims Should Be Tossed

Shopping mall giant Simon Property Group, Inc. on Friday asked a federal court in Indiana to dismiss antitrust claims brought by competitor Gumwood HP Shopping Partners, claiming that a magistrate judge misapplied federal antitrust law in recommending that Simon’s motion to dismiss be denied.

Simon claims that Magistrate Judge Christopher A. Nuechterlein of the U.S. District Court for the Northern District of Indiana erred in finding that Gumwood had sufficiently pled that Simon had “partially excluded” it from the shopping center market in Mishawaka, Indiana, in violation of the Sherman Act.  Simon is now asking presiding Judge Jon E. DeGuilio to toss the complaint.

Gumwood’s complaint in Gumwood HP Shopping Partners LP v. Simon Property Group Inc. alleges that Simon, the largest public real estate company in the United States, and a major force in shopping malls, violated the Sherman Act’s prohibitions against monopolization and unreasonable restraints of trade.   According to the complaint, which was filed in June 2011, Simon used threats, bullying and other “anti-competitive tactics” against tenants to stop them from leasing space from competitors such as Gumwood.

Gumwood alleges that Simon interfered with Gumwood’s negotiations with retail tenant Ann Taylor LOFT by pressuring Ann Taylor not to open its store at Heritage Square, Gumwood’s one mall.  Gumwood alleges that this interference caused multiple tenants to cease their dealings with Heritage Square.  Gumwood further alleges that Simon Property engaged in false representations and other anticompetitive tactics with other actual and potential Heritage Square tenants including Layne Bryant, Coldwater Creek, Eddie Bauer, and Acorn.

Simon argues that the Sherman Act claims should be dismissed because Gumwood failed to allege a relevant product market, substantial market foreclosure, competitive harm, or anticompetitive conduct.

Magistrate Judge Nuechterlein was not persuaded by Simon’s arguments, and concluded that Gumwood properly alleged that Simon’s actions restrained trade in retail shopping centers by inducing retail tenants to cease business dealings with Simon’s competitor.  As a result, Magistrate Judge Nuechterlein decided that Gumwood had properly pled claims under sections 1 and 2 of the Sherman Act, and recommended that Simon’s motion to dismiss be denied.