Hecht Co. had already disapproved Dalmo.
14. Lansburgh's made no response to Tysons Corner's letter. According to its lease, as well as those of Hecht Co. and Woodward, this failure to disapprove amounted to an automatic approval of Dalmo.
15. Approximately one or two months after Hecht Co. disapproved Dalmo, Mr. Lerner of Tysons Corner telephoned Mr. Selonick of Hecht Co. and told him either that Woodward had reconsidered and was willing to withdraw its disapproval of Dalmo or that Woodward was reconsidering its disapproval. Lerner requested that the Hecht Co. withdraw its disapproval of Dalmo. Mr. Selonick then telephoned Mr. Hoffman of Woodward because he doubted the accuracy of the information Mr. Lerner had given him. Upon being asked whether Woodward had withdrawn or was considering withdrawing its disapproval of Dalmo, Mr. Hoffman is reported as having said, "At this point, I don't remember who Dalmo is." Selonick did not discuss approval of Dalmo with Lansburgh's.
16. On June 5, 1969, Tysons Corner entered into a lease with Sun Radio, a store engaged in discount selling operations. That lease was not disapproved by Woodward, Hecht Co. or Lansburgh's. The final lease with Sun Radio contains the provisions against sales at discount or bargain prices and discount advertising which apparently are in all the form leases at Tysons Corner.
17. Evidence proffered by plaintiffs at a subsequent hearing on December 9, 1969, shows that leases executed by three other large Washington area shopping centers with Hecht Co. and Woodward contain provisions preventing the landlord from leasing to discount stores or houses. These leases were executed between 1957 and 1959. Another lease between Woodward and Iverson Mall of February 9, 1966 prohibits the landlord from leasing to second-hand or surplus stores or discount houses. Leases involving five other shopping centers and Woodward, and/or Hecht Co. contain no such restrictions barring discount houses. Of these five leases, four contain approval rights similar to those embodied in the Tysons Corner leases. Four of these five leases were executed after 1963, the other in 1954. All nine of the above leases are still in effect.
18. Hecht Co., Woodward and other stores at Tysons Corner sell household appliances and other merchandise similar to that sold by Dalmo, and compete with each other and with Dalmo in the sale of such merchandise. Hecht Co., Woodward and other stores at Tysons Corner, to a certain but undefined extent, sell such merchandise at less than the manufacturers' suggested retail prices.
19. The evidence is in conflict as to the specific reasons for the disapproval of Dalmo by Hecht Co. and Woodward. Evidence presented by Dalmo that its policy of discount pricing and discount advertising is the real basis for its being disapproved is countered by the evidence of Tysons Corner, Hecht Co. and Woodward that Dalmo, because of the nature and quality of its operations in its six stores, did not fit into the "fashion image" which Tysons Corner and the department stores there located purportedly seek to promote.
Conclusions of Law
1. This court has jurisdiction to entertain this action. It has personal jurisdiction over the parties and the subject matter of the controversy concerns interstate commerce.
2. Plaintiffs have failed to meet their burden of showing a substantial likelihood or, at least, a reasonable probability that they will prevail at trial on the merits, a showing requisite to the issuance of a preliminary injunction. A Quaker Action Group v. Hickel, 137 U.S. App. D.C. 176, 421 F.2d 1111 (1969); see Virginia Petroleum Jobbers Ass'n v. FPC, 104 U.S. App. D.C. 106, 110, 259 F.2d 921, 925 (1958).
The evidence on the present record is in conflict as to the motive and purpose of the department stores in excluding Dalmo from the Tysons Corner Center. At trial, defendants may well be able to demonstrate their contention that Dalmo was excluded because the shopping center and the department stores, all with a heavy financial stake in the success of the enterprise, concluded that Dalmo was not the type of store which would promote the image of fashion and quality desired for the Tysons Corner development. As an example, the record shows that the president of the Hecht Co. visited a Dalmo store and entertained the same doubts about the acceptability of Dalmo as a tenant that he had previously expressed about a restaurant which was not a Hecht Co. competitor. In addition, discount prices or sales below list price were offered by the department store defendants as well as certain of the satellite stores at the Center. Such practices would seem to indicate that discount pricing alone was not a controlling consideration. Under these circumstances, it is doubtful whether the plaintiffs can show that the exclusion of Dalmo from Tysons Corner pursuant to the lease provisions constituted a group boycott per se violative of the antitrust laws.
Group boycotts held by the Supreme Court to fall within the category of per se illegality have, with the possible exception of Silver v. New York Stock Exchange, 373 U.S. 341, 10 L. Ed. 2d 389, 83 S. Ct. 1246 (1963), involved significant anticompetitive motives. See Klor's Inc. v. Broadway-Hale Stores, Inc., 359 U.S. 207, 3 L. Ed. 2d 741, 79 S. Ct. 705 (1959); United States v. General Motors Corp., 384 U.S. 127, 147, 16 L. Ed. 2d 415, 86 S. Ct. 1321 (1966); cf. Associated Press v. United States, 326 U.S. 1, 16, 89 L. Ed. 2013, 65 S. Ct. 1416 (1944); Fashion Originators' Guild of America v. FTC, 312 U.S. 457, 85 L. Ed. 949, 61 S. Ct. 703 (1941); Eastern States Retail Lumber Dealers' Ass'n v. United States, 234 U.S. 600, 611, 58 L. Ed. 1490, 34 S. Ct. 951 (1914); S. Chesterfield Oppenheim & Glen E. Weston, Federal Antitrust Laws 530 (3rd ed. 1968). Where there is absence of an anticompetitive motive, or where the anti-competitive motive is not clearly demonstrable, the legality of a group boycott under the Sherman Act may very well be subject to test under the rule of reason. United States v. Insurance Board of Cleveland, 188 F. Supp. 949 (N.D. Ohio 1960); Coons, Non-Commercial Purpose As A Sherman Act Defense, 56 Nw. U.L. Rev. 705, 752 (1962); see Young v. Motion Picture Ass'n of America, Inc., 112 U.S. App. D.C. 35, 299 F.2d 119 (1962), cert. denied, 370 U.S. 922, 8 L. Ed. 2d 504, 82 S. Ct. 1565 (1962). Specifically, the rule of reason may be applicable to boycotts involving competitors where the motives for exclusion are not directly profit related. Coons, supra, 56 Nw. U.L. Rev. at 752, 755; cf. Savon Gas Stations Number Six, Inc. v. Shell Oil Co., 309 F.2d 306, 309-310 (4th Cir. 1962), cert. denied, 372 U.S. 911, 9 L. Ed. 2d 719, 83 S. Ct. 725 (1963).
3. The presence of novel legal issues, which require resolution at trial, preclude the grant of a preliminary injunction, Instant Delivery Corp. v. City Stores Co. et al., 284 F. Supp. 941 (E.D. Pa. 1968). In this case, it is clear that the successful development of Tysons Corner or any similar regional shopping center is dependent on obtaining the prior long term commitments of large department stores. The commitments are necessary for at least two reasons: (1) to attract the financial backing of a lending institution to construct the shopping center, and (2) to attract the variety of smaller stores dependent on the consumer traffic generated by the department stores. The heavy financial stake of Tysons Corner and the department stores which are parties to long-term leases in the future success of such an enterprise may very well give them the right to select and approve tenants who in their judgment will contribute to the success of the enterprise without being subject to the per se rule of illegality applied to group boycotts and concerted refusals to deal under the Sherman Act. Certainly, Tysons Corner as the lessor has the right to refuse to lease to any tenant and has the right to grant a single tenant the exclusive right to conduct a particular type of business. See Savon, supra. Any restraint involved in the sharing by Tysons Corner of such rights with the department stores whose prior commitments are necessary to the success of the enterprise may very well be deemed to be a reasonable one under the antitrust laws. In any event, the legal question appears to be a novel one since the parties have not been able to cite, nor have we been able to find, any case bearing upon this precise question.
4. Plaintiffs have not established an intent to monopolize by the defendants or the existence of monopoly power in the relevant market. This court cannot conclude that a substantial likelihood exists that plaintiffs will establish these essential elements of their monopolization claim at trial.
5. Although plaintiffs' request for a preliminary injunction must be denied, the interests of justice require preservation of the injunction pending appeal, which plaintiffs have indicated they plan promptly to take. Since a temporary restraining order has been in effect since August, 1969, the parties would not be unduly inconvenienced by a further extension of the status quo. Also, plaintiffs would incur irreparable injury if defendants were allowed to rent the space now the subject of the restraining order and if plaintiffs were ultimately to prevail on appeal. This court, in its discretion, will therefore enter an order pursuant to Rule 62(c), Fed. R. Civ. P., granting an injunction for ninety (90) days from the date of this order or until disposition of the case upon summary hearing, whichever occurs first.
Wherefore, it is this 2nd day of January, 1970, Ordered, Adjudged and Decreed:
1. That plaintiffs' motion for a preliminary injunction be, and the same hereby is denied;
2. That defendant is enjoined, for a period of ninety (90) days from the entry of this order or until an appeal is determined in this case, whichever first occurs, from leasing to another tenant space "5" in Building "G" in the Tysons Corner Center (as shown by the configuration of that space indicated by Glenn Exhibit 5 in the record) consisting of 4,050 square feet of floor space on the Mall floor with a frontage of at least 30 feet, together with connecting basement area of at least 1,000 square feet.
3. That plaintiffs shall post an appeal bond of $10,000.00.