SACRAMENTO, Calif. (CN) — Finding price-fixing agreements existed between landowners who pushed back against a group that wants to build a sustainable community in Northern California, a federal judge on Friday kept alive a lawsuit accusing the owners of colluding to inflate home prices in violation of the Sherman Antitrust Act.
U.S. District Court Judge Troy Nunley denied motion to dismiss the 2023 lawsuit filed by Flannery Associates, which has bought around 50,000 acres in Solano County and wants to build a workable, sustainable community that offers some solution to the state’s housing crisis. At the time it filed suit, it already had bought or planned to buy some 140 properties at over $800 million.
The landowners, under the moniker Barnes Family Ranch Associates, argue that land shouldn't be treated the same as other commodities, since people may opt to reap its value by keeping, rather than selling it and say Flannery has no facts to support its claims.
Judge Nunley disagreed with that take in his Friday ruling, pointing to text messages between some landowners stating that they should agree on a sale price and shouldn’t allow Flannery’s attorneys to play them against each other.
“While defendants are correct that these statements do not reveal ‘defendants mutually agreed not to sell below a particular price per acre,’" Nunley wrote, "these statements do reveal there was some sort of agreement among defendants to fix the price of land in Solano County.”
At this stage, Flannery needs only to show a reasonable expectation that additional evidence will point to an illegal agreement.
“With these text message and email exchanges among defendants, plaintiff has done so and more, and the court finds it is reasonable to expect further discovery will reveal additional details such as ‘when and at what price’ defendants and other landowners would have sold their land to plaintiff for,” the judge wrote.
The landowners argue that they can’t compete with each other and say real property isn’t the kind of item the Sherman Act controls.
Nunley, however, said horizontal price-fixing is a violation of the act regardless of the industry.
Additionally, the landowner association said Flannery lacks antitrust standing because any injury it experienced wasn’t direct and the supposed harm was too speculative.
Nunley focused instead whether Flannery has properly argued it was injured by the landowners’ attempts to raise property prices. He pointed to an email exchange in his ruling between landowners as an example.
“No one is suggesting that we don’t sell, the question is when and at what price,” the email stated. “Several of the other major landowners in the area are basically taking their time as well and not engaging with [Flannery].”
Nunley said Flannery has shown that some landowners influenced the decisions of others to demand higher prices. That means their anticompetitive acts affected the housing market, raised prices and led Flannery to overpay.
The landowners, Flannery argues, had a motive to drive up prices; acted against their self-interest by rejecting offers much higher than average market price; and exchanged texts and emails about the land — all of which point to a conspiracy.
“Defendants are correct that there may be many explanations for why individual defendants ultimately decided not to sell their properties to plaintiff,” Nunley wrote. “After all, defendants were under no obligation to sell their properties to plaintiff. However, plaintiff is ‘not required to disprove all possible explanations to survive a motion to dismiss.’”
Attorneys for both parties couldn’t be reached for comment.
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