Edinboro College Park Apartments v. Edinboro University Foundation
2017 U.S. App. LEXIS 4160
| 3rd Cir. | 2017Background
- Plaintiffs are private off‑campus landlords who allege Edinboro University and the Edinboro University Foundation conspired to monopolize the local student‑housing market after the Foundation financed and built a large dorm project (the Highlands).
- The Foundation amended its charter, issued bonds, built and managed the Highlands; the University leased land to the Foundation and expanded its on‑campus residency requirement from two to four semesters, allegedly directing demand to Highlands.
- Plaintiffs sued the Foundation and the University president in her official capacity under Ex parte Young, alleging a Section 2 Sherman Act monopolization conspiracy; they did not name the University directly (conceding Eleventh Amendment issues).
- The district court dismissed with prejudice, holding the University’s conduct was immune under the Parker state‑action doctrine because the University is an arm of the state.
- The Third Circuit reviews de novo and focuses on (1) which actor caused the alleged anticompetitive injury and (2) which Parker standard of review applies (ipso facto, Midcal, or Hallie).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Foundation acted independently so Midcal should apply | Foundation independently conspired to monopolize via its nonprofit actions | Foundation acted under University direction and thus immunity should reach it | Held: Foundation did not independently cause the injury; immunity of the University passes through to Foundation |
| Whether University is ipso facto (automatic) Parker‑immune as a sovereign arm of the state | University’s status as a state institution makes its acts sovereign and automatically immune | University is an arm of the state for Eleventh Amendment but not a sovereign actor for Parker ipso facto immunity | Held: Rejected ipso facto immunity; University is non‑sovereign for Parker purposes |
| Which Parker scrutiny applies to the University: Midcal (two‑prong) or Hallie (single‑prong) | Plaintiffs: Midcal (or Dental Examiners) should apply absent clear evidence of active state policy; if University dominated by market actors, active supervision required | Defendants: Hallie suffices because University is an arm of the state and presumed to act in public interest; active supervision unnecessary | Held: Hallie applies (University like a municipality); only the clear‑articulation prong is required unless plaintiffs plausibly plead control by active market participants |
| Whether University’s expanded residency rule satisfies the clear‑articulation requirement | Plaintiffs: Expansion was financially motivated and ultra vires; no clear legislative authorization to displace competition | Defendants: Pennsylvania law requires each institution to provide appropriate student living facilities, which foreseeably authorizes residency rules that displace competition | Held: The General Assembly’s mandate to provide student living facilities clearly articulates a policy that foresees and authorizes on‑campus residency rules; University conduct meets Hallie’s clear‑articulation test |
Key Cases Cited
- Parker v. Brown, 317 U.S. 341 (1943) (Sherman Act does not reach anticompetitive state action)
- California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 (1980) (two‑part test for private parties seeking Parker immunity: clear articulation and active supervision)
- Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985) (municipalities need only clear articulation; active supervision not required)
- N.C. State Bd. of Dental Exam’rs v. FTC, 135 S. Ct. 1101 (2015) (state agencies are not automatically sovereign; active supervision required when controlled by active market participants)
- F.T.C. v. Phoebe Putney Health Sys., Inc., 133 S. Ct. 1003 (2013) (clear‑articulation requires that anticompetitive effect be a foreseeable result of state authorization)
- Goldfarb v. Va. State Bar, 421 U.S. 773 (1975) (a state entity’s mere governmental character does not automatically confer Parker immunity)
- City of Columbia v. Omni Outdoor Advert., Inc., 499 U.S. 365 (1991) (legislative authorization for municipal zoning reasonably contemplates displacement of competition)