Court Denies Rehearing for UnitedNational Maintenance in Antitrust Case Against San Diego Convention Center Corp.

August 24, 2014

Nine years and several court rulings later and UnitedNational Maintenance, a Chicago-based trade show cleaning company, recently was stymied when the U.S. 9th Circuit Court of Appeals denied rehearing the company’s antitrust case brought against the San Diego Convention Center Corp., which oversees the city’s center.

Carol Wallace, president and CEO of SDCCC, said of the ruling, “This is a win for San Diego, but more importantly, a landmark win for the facility management industry, as it will allow venues to operate and manage their buildings as they see fit.”

Richard Simon, president and CEO of UnitedService Co., the parent company of UNM, disagreed and added, “I fail to see how this (ruling) is a ‘win for anyone’ …, and (this) case is a black eye for SDCCC. This ruling, if left standing, allows the facility to interfere with any contract in any manner.”

The years-long dispute began when SDCCC officials cited security concerns and said that any shows coming into the venue would be required to exclusively use their in-house cleaning personnel, blocking UNM from working with two service contractors at the time.

UNM sued SDCCC in November of 2007 on claims of intentionally interfering with contractual relationships, antitrust violations and interference with prospective economic advantage.

The contractual interference case is unresolved, after it was found the jury was not given the correct instructions.

The antitrust case originally was ruled against UNM in May 2014, before the recent denial to rehear the case Aug. 15.

In the original antitrust case, the Ninth Circuit cited that SDCCC operates as an “instrument” of San Diego based on the facts that SDCCC’s board members are appointed by the City of San Diego, SDCCC’s assets revert to San Diego and the fact that “SDCCC must publicly account for its operations.”

SDCCC “is an extension of the municipality of San Diego and thus does not require active supervision by the state in order to retain its immunity from antitrust liability,” the court concluded.

In the denial to rehear the case, Judge Andrew D. Hurwitz of the Ninth Circuit Court concurred, stating that in addition to state action immunity, SDCCC would win on the antitrust claims because “no jury could reasonably find that SDCCC engaged either in monopolization or an attempt to monopolize by mandating that its own employees clean its building.”

Leaders from the Society of Independent Show Organizers, Exhibition Services & Contractors Association and the International Association of Exhibitions and Events said they were “disappointed at the result of the Ninth Circuit Court of Appeals.”

They added, “The decision to allow San Diego to virtually eliminate fair and equal access to organizers’ existing contracts with vendors is a restraint of trade forcing organizers to use the vendors selected by the convention center, which automatically creates control and quality issues for the organizers and their exhibitors.”

Simon said that, besides the support of the industry associations, “numerous show organizers have made public statements, as well as written documents and even testified at trial against the SDCCC policy.”

Despite the cost and time spent on litigation so far, Simon said he will file at the District Court for a new trial related to the contractual interference claims.

In addition, he added he intends to explore the next steps as it relates to the antitrust issues and file actions that are appropriate “that will secure not only our rights but those of every show manager, contractor and facility regardless of the service they provide.”

Simon said, “This would protect the industry as a whole and insure that the American Free Enterprise System governs the trade show industry as a whole and not just one portion of the industry that may consider itself a ruling class.”

In other words, he added, he will continue to fight against SDCCC’s exclusive policy.

“I have been a member of this industry for many years and would like to think that in some small way I have helped it grow during my tenure,” Simon said. “I feel that we owe a duty to those coming behind us to leave the industry in better shape than we found it as those coming next have a duty to do the same.”

Timeline of Rulings:

·         May 4, 2011, the jury returned a unanimous verdict on UNM’s intentional interference with contractual relations claim.

·         The jury awarded UNM damages of $668,905. The jury did not reach a verdict on UNM’s remaining claims.

·         SDCCC filed a motion for new trial on UNM’s intentional interference with contractual relations claim and a renewed motion for judgment as a matter of law on UNM’s other claims.

·         The district court held that SDCCC was entitled to a new trial as the district court had previously erred in not giving a legal interpretation of UNM’s contracts.

·         The district court held that UNM had failed to present sufficient evidence on the specific elements of its antitrust claims.

·         The court dismissed UNM’s claims for interference with prospective economic advantage and punitive damages, as well as UNM’s motion for injunctive relief.

·         UNM appealed, bringing the matter to the Ninth Circuit Court, which ruled against UNM on the antitrust claims and request to rehear the case.

·         As far as the contractual interference case, Ninth Circuit Court did reaffirm the district court’s holding that it committed instructional error by not interpreting the terms of the contracts to enable the jury to understand whether the maintenance company’s performance was disrupted and that this error constituted prejudicial error that warranted a new trial.

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