USC, Urban Partners Sue Conquest
The Daily Trojan -- September 5, 2007
The lawsuit filed Tuesday alleges Conquest Student Housing illegally blocked USC-supported Gateway project.
By: Alexander Comisar and Dan Loeterman
USC and the developers of the University Gateway housing complex have filed a lawsuit against Conquest Student Housing, alleging that the company illegally monopolizes the North University Park housing market through "abusive litigation, extortion, fraud and intimidation."
The 62-page lawsuit was filed Tuesday in federal district court in California by USC and Urban Partners, LLC, the primary developer of the 1,600-bed mixed-use project planned for the corner of Jefferson Boulevard and Figueroa Street. The suit charges that Conquest has intentionally prevented the construction of the Gateway project, threatened litigation against competitors looking to build in the USC area and tried to prevent USC from building additional housing of its own.
Though USC administrators have long expressed frustration with the business tactics used by Conquest, which owns 19 buildings near campus, this is the first time the university has taken legal action against the housing company.
"The key to this is that Conquest has campaigned for the last two years to monopolize student housing around USC," said Vice President for Student Affairs Michael L. Jackson.
Though Conquest has been the most vocal opposition to the Gateway project, the company is not alone.
However, "when you have an entity like Conquest who is trying to block our initiatives, they need to be confronted," Jackson said.
Conquest attorney Jack Rubens said university lawyers had not informed him of any lawsuit as of Tuesday afternoon, and he declined to comment on reports of the university's allegations. Calls and e-mails to Conquest's USC-area office were not returned.
The lawsuit seeks unspecified damages, though a lawyer at the private law firm representing the plaintiffs said he believed there have been "millions of dollars in damages."
Matt Burton, a principal at Urban Partners, said Conquest has hampered construction work on University Gateway and attempted to stall Urban Partners' projects in other parts of the country where Conquest has no business.
"They have appealed and followed up with litigation where they have no interest," Burton said. "Conquest has been on a two-year campaign to control and monopolize the housing market around USC and we want to be compensated for our losses."
The suit also names Conquest owners Brian Chen and Alan Smolinisky as defendants, arguing the pair have violated the Sherman Antitrust Act and engaged in racketeering.
The Sherman Act is cited in most federal antitrust suits. It was passed in 1890 in response to the monopolistic business practices of conglomerates such as Standard Oil Co. To argue successfully that Conquest has violated the act, the university must prove that Conquest used illegal business practices to gain a monopoly on student housing.
USC would also have to show that students do not have other legitimate housing options, a process known as defining the relevant market, said Jonathan Barnett, an expert on antitrust law and assistant professor at the Gould School of Law.
"Assuming the facts as stated are correct and subject to the definition of the relevant market, USC certainly has a legitimate claim," Barnett said.
But Barnett noted that antitrust allegations are generally very difficult to prove.
USC is also suing for violation of the Racketeer Influenced and Corrupt Organizations Act, a law created to target members of criminal organizations and usually used in federal criminal cases. According to one legal expert, the use of RICO in a civil case would be more for show than to recoup damages.
One example of an illegal business practice cited in the university's lawsuit is Conquest's alleged attempt to discredit the University Gateway Project by waging a misinformation campaign, which included billboards, fliers and a website - www.stopuniversitygateway.com - attacking the project.
The university's lawsuit takes issue with Conquest's conduct in negotiations with USC and other developers. A press release issued on behalf of USC and Urban Partners relates the claim that Conquest, in a meeting with another organization, called itself the "al-Qaeda" of the USC housing market because of its self-professed ability to financially "bomb" the competition in USC's vicinity.
Some students have also expressed discontent with Conquest's business practices and rental costs.
"I'm thrilled that USC is taking action on this," said Max Slavkin, vice president of Undergraduate Student Government. "Conquest has been so bad for so many people in the USC community."
Jackson said he hopes the lawsuit results in housing developers feeling free to build around USC "without being attacked frivolously and blocked because somebody wants to monopolize student housing in the University Park area." © Copyright 2007 Daily Trojan
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