Antitrust

Yale College denied plaintiffs, Orthodox Jewish freshmen and sophomores, the right to reside off campus, even though they objected on religious grounds to being required to reside on campus in co-educational residence halls; the district court granted defendants' motion to dismiss plaintiffs’ 42 U.S.C. § 1983 action, as well as its claims under the Sherman Antitrust Act, for failure to state a claim; the district court also dismissed plaintiffs’ claim under the federal Fair Housing Act (FHA) for lack of standing and refused to entertain the state law claims for breach of contract and unjust enrichment; the Second Circuit Court of Appeals affirmed dismissal of each of plaintiffs’ claims, although, prior to holding that plaintiffs’ complaint failed to state a claim under the FHA, it held that plaintiffs, contrary to the holding of the district court, did have standing to assert a claim under the FHA    Case # 988 (2d Cir.), affirming, Case # 312 (D. Conn.)

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Plaintiff, a Catholic hospital having a healing ministry, sought to expand its facilities. Its only other competition in town was a county hospital, a full service hospital offering medical services to all citizens of the county regardless of their ability to pay. Seeking to prevent the private, Catholic hospital from duplicating the same services that the county hospital offered, and hence to assure the continued viability and financial performance of the county hospital, the county passed an Ordinance declaring a moratorium on new hospital construction or expansion in 2005. The Ordinance provided an exception to the moratorium for applicants who could demonstrate sufficient need according to criteria set out in the Ordinance. Beginning in 2006, hospitals such as plaintiff were required to apply to the county Board of Commissioners for a permit. Again, the Ordinance set forth factors to be considered in deciding whether to approve an application. Plaintiff did not submit an application for an exception to the 2005 moratorium or apply for Board approval of future expansion plans. Instead, plaintiff filed suit alleging that the Ordinance violated the Sherman Antitrust Act, the Religious Land Use and Institutionalized Persons Act (RLUIPA), the Indiana Home Rule Act, and Indiana zoning laws. The district court held: (1) Although plaintiff and defendants were direct competitors for hospital-based health care services in the county, and the county was not exempt from the reach of the Sherman Act by the state action doctrine, plaintiff failed to show that the Ordinance constituted or compelled a conspiracy within the meaning of Section 1 of the Sherman Act. (2) Plaintiff’s facial challenge to the Ordinance under RLUIPA was ripe for consideration even though it had refused to apply for an exception to the moratorium, however, the facial challenge was dismissed. The only burden presently imposed by the Ordinance on religious practice was having to apply for a permit, having to submit potentially confidential business information to the Commissioners, and facing possible rejection of the application. Such inconvenience did not rise to the level of a substantial burden under RLUIPA. (3) However, plaintiff was entitled to a permanent injunction against enforcement of the Ordinance, because the Ordinance violated Indiana’s Home Rule Act. Indiana law specifically provided that a local government seeking to regulate conduct licensed, inspected, or prohibited by the state could do so only where expressly allowed by statute. Indiana law explicitly granted a state agency the right to “license and regulate” hospitals, including the construction of new and expanded hospital facilities, and the county had not been expressly granted by statute the authority to regulate that same conduct. The mere grant of authority to the county to “aid” the county hospital did not support an inference that the state had given the county the power to hinder the county hospital’s competition by prohibiting plaintiff’s expansion. In addition, the argument that the county’s authority to “aid” a county hospital included the power to enact ordinances that purposely blocked a principal competitor could not be reconciled with the state’s express policy favoring competition among hospitals. (4) The Ordinance did not violate Indiana zoning laws, because the Ordinance was not a zoning law under Indiana law, but a form of economic regulation. Thus, if the Ordinance had not been in violation of the Home Rule Act, it would not have been barred by the zoning law   Case # 2115 (S.D. Ind.)

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