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Domed Stadium Hotel, Inc. v. Holiday Inns, Inc.

United States Court of Appeals for the Fifth Circuit

May 21, 1984

No. 83-3074

Opinion

 [*482]  E. GRADY JOLLY, Circuit Judge:

The Domed Stadium Hotel, Inc. (Superdome Hotel), a Louisiana corporation, brought this action against Holiday Inns, Inc., a Tennessee corporation, alleging that Holiday Inns' acquisition of the Chateau LeMoyne Hotel in downtown New Orleans breached its franchise agreement with Holiday Inns and also violated sections one and two of the Sherman Act, 15 U.S.C. §§ 1, 2, and section seven of the Clayton Act, 15 U.S.C. § 18. After lengthy discovery the district court orally granted Holiday Inns' motion for summary judgment on both the antitrust claims and the contract claims. We agree with the district court that the contract claims, Clayton Act claims and section one Sherman [**2]  Act claims are without merit. We also hold that as a matter of law, the relevant product market is hotel rooms generally, and not the submarket of Holiday Inn hotel rooms. We agree with the district court that Holiday Inns does not have legally sufficient market power  [*483]  within the hotel room product market so that its actions violate section two of the Sherman Act or Section seven of the Clayton Act. We therefore affirm the decision of the district court.

In December of 1974, after more than a year of negotiating, Joseph M. Rault, Jr., President of The Domed Stadium Hotel, Inc., entered into a management agreement with Holidy Inns providing for Holiday Inns to manage the seventeen-story building he owned in downtown New Orleans as a Holiday Inn hotel. Dissatisfied with this arrangement, in 1976 the parties altered their relationship, and the Superdome Hotel became a franchised member of the Holiday Inn chain. The franchise agreement between the parties granted the Superdome Hotel the right to operate a Holiday Inn hotel at a specific site in downtown New Orleans, and explicitly reserved to Holiday Inns the right to construct and operate other Holiday Inn hotels [**3]  "at any place other than on the site licensed." 1 As a franchised Holiday Inn hotel, the Superdome Hotel enjoyed all the benefits of Holiday Inns' nationwide advertising and marketing programs, and also obtained business through Holiday Inns' toll-free nationwide computerized reservations service known as "Holidex."

 [**4]  Prior to 1974 when the Superdome Hotel first began operating as a Holiday Inn, Holiday Inns owned and operated the Holiday Inn-French Quarter, the only Holiday Inn hotel in downtown New Orleans. The approximately 250-room Holiday Inn-French Quarter enjoyed a high rate of occupancy and often could not accommodate all the patrons who, through Holidex, attempted to reserve hotel rooms in downtown New Orleans. After the Superdome Hotel became part of the Holiday Inns chain, Holiday Inns referred Holidex patrons to the Superdome Hotel. Some of these Holidex referrals were patrons whom the Holiday Inn-French Quarter could not accommodate.

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732 F.2d 480 *; 1984 U.S. App. LEXIS 22306 **; 1984-1 Trade Cas. (CCH) P66,008

The DOMED STADIUM HOTEL, INC., d/b/a Holiday Inn-Superdome, Plaintiff-Appellant, v. HOLIDAY INNS, INC., Defendant-Appellee

Prior History:  [**1]  Appeal from the United States District Court for the Eastern District of Louisiana.

Disposition: AFFIRMED.

CORE TERMS

Hotel, percent, market share, monopolization, hotel room, district court, cases, concentration, relevant market, Sherman Act, acquisition, downtown, antitrust, franchise agreement, summary judgment, reservations, franchise, license, merger, entity, brand, Clayton Act, acquiring, monopoly, matter of law, construct, fiduciary, site, summary judgment motion, anti-competitive

Contracts Law, Contract Interpretation, General Overview, Defenses, Ambiguities & Mistakes, Remedies, Ratification, Business & Corporate Law, Distributorships & Franchises, Causes of Action, Fiduciary Duties, Fiduciary Responsibilities, Governments, Fiduciaries, Corporate Finance, Franchise Tax, Franchise Relationships, Franchise Agreements, Termination, Civil Procedure, Summary Judgment, Burdens of Proof, Antitrust & Trade Law, Sherman Act, Claims, Monopolies & Monopolization, Conspiracy to Monopolize, Sherman Act, Criminal Law & Procedure, Inchoate Crimes, Conspiracy, Elements, Actual Monopolization, Attempts to Monopolize, Scope, Regulated Practices, Market Definition, Attempt, Acts & Mental States, Mens Rea, Specific Intent, Clayton Act, Scope, Mergers & Acquisitions Law, Antitrust, Antitrust Statutes, Clayton Act, Market Definition