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JOHNSON v. SOUNDVIEW APTS. HOUS. DEV. FUND CO.

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK


May 17, 1984

JEAN JOHNSON, SEYMOUR JOHNSON, ANNE HIRSCH and JOSEPH TIEGER, individually and on behalf of all other persons similarly situated, Plaintiffs, against SOUNDVIEW APARTMENTS HOUSING DEVELOPMENT FUND CO., INC. and UNITED HOME FOR AGED HEBREWS and GEORGE M. FRIEDLAND, HERBERT PLATZNER, SAUNDERS T. PREISS and CHARLES H. SINGER, individually and as officers of defendants Soundview Apartments Housing Development Fund Co., Inc. and United Home for Aged Hebrews, (the Private Defendants), UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, SAMUEL R. PIERCE, SECRETARY, UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, and JOSEPH D. MONTICCIOLO, REGIONAL ADMINISTRATOR, UNITED STATES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT, (the Federal Defendants), Defendants.

The opinion of the court was delivered by: SPRIZZO

OPINION AND ORDER

SPRIZZO, D.J.:

 Plaintiffs, residents of Soundview Apartments, commenced this action against Soundview Apartments Housing Development Fund Co., Inc., owner and landlord of Soundview Apartments and United Home for Aged Hebrews, along with a number of their officers (the "Soundview defendants"), and the United States Department of Housing and Urban Development and two of its officers (the "HUD defendants"). Plaintiffs claim that a mandatory meal plan to which they are required to subscribe at Soundview Apartments violates section 1 of the Sherman Act, 15 U.S.C. § 1, section 8 of the United States Housing Act of 1937, 42 U.S.C. § 1437f, and section 202 of the Housing Act of 1959, 12 U.S.C. § 1701q.

 The HUD defendants moved to dismiss the claims against them, which are based on the Housing Acts. The Soundview defendants joined in that motion, and renewed their motion for summary judgment with respect to the plaintiffs' claim that the mandatory meal plan constitutes an illegal tying arrangement in violation of section 1 of the Sherman Act.

 1. The Housing Act Claims.

 The claims against all defendants predicated on alleged violations of section 8 and section 202 of the Housing Acts must be dismissed. Section 8 provides that no family qualified to receive housing assistance payments under the statute shall pay in excess of 30% of the family's monthly adjusted income in rent. *fn1" Plaintiffs argue that Soundview's mandatory meal plan violates the statute because the charge for meals constitutes "rent" within the meaning of section 8, and that the total charge for housing and meals therefore exceeds the 30% limitation imposed by section 8. They also argue that the mandatory meal plan frustrates the Congressional purpose in enacting both sections 8 and 202.

 These arguments lack merit. There is no statutory or case authority *fn2" to support plaintiffs claim that the term "rent" as used in section 8 should be construed in any sense other than its ordinary meaning. The word "rent" customarily refers to payment for shelter, and not meals. *fn3" Absent such authority, there is no basis to conclude that section 8 precludes the type of mandatory meal plan at issue here.

 Furthermore, this holding is consistent with the manner in which HUD has interpreted the statute, since HUD has permitted mandatory meal plans. See HUD Handbook 4571.1 REV-2, § 5-33(c), at 5-25 (March 1983). In the absence of any support for plaintiffs' arguments, the Court finds that the agency's interpretation of the statute is reasonable and not inconsistent with the purposes of section 8 or section 202, and thus sees no reason why it should not defer to and acquiesce in that interpretation. See, e.g., Morton v. Ruiz, 415 U.S. 199, 237, 39 L. Ed. 2d 270, 94 S. Ct. 1055 (1974); Udall v. Tallman, 380 U.S. 1, 16, 13 L. Ed. 2d 616, 85 S. Ct. 792 (1965); Mayoral v. The Jeffco American Baptist Residences, Inc., 726 F.2d 1361, slip op. at 4 (10th Cir. 1983).

 It follows that the third and fifth claims of the amended complaint must be dismissed as to all defendants. The fourth and sixth claims, which are also predicated upon the underlying assumption that mandatory meal plans violate the Housing Acts, must also be dismissed. See Transcript of Proceedings (April 27, 1983). *fn4"

 2. The Antitrust Claims.

 There is some question as to whether plaintiffs have a valid claim against the Soundview defendants under section 1 of the Sherman Act. Plaintiffs allege that the mandatory meal plan constitutes an illegal tying arrangement. While the Court initially denied defendants' motion for summary judgment, more recent case authority has caused the Court to reconsider whether one of the essential elements of a proscribed tying arrangement is present in this case -- whether a substantial volume of commerce in the tied market is foreclosed. See, e.g., Jefferson Parish Hospital District v. Hyde, 466 U.S. 2, 52 U.S.L.W. 4385, 4389, 80 L. Ed. 2d 2, 104 S. Ct. 1551 (U.S. March 27, 1984).

 Under Federal Rule of Civil Procedure 56, plaintiffs, in opposing defendants' motion for summary judgment, have the burden of demonstrating that there are sufficient issues of fact warranting a trial of the antitrust claims. The Court is not satisfied that the facts thus far submitted are sufficient to resolve that issue.

 Therefore, assuming that the tied market is the market for furnished meals, on or before May 28, 1984 plaintiffs shall submit to the Court factual affidavits containing evidence as to the following: (1) whether plaintiffs would have purchased furnished meals elsewhere in the area of Soundview Apartments, if they were not required to subscribe to the meal plan; (2) the volume and nature of the market for furnished meals in the area; and (3) the total volume of sales in the tied market and the impact on that market assuming plaintiffs were permitted to spend the money expended on the mandatory meal plan in the tied market.

 Assuming that, as plaintiffs contend, the tied market is the sale of food generally, the plaintiffs shall also set forth the evidence they expect to introduce at trial with respect to: (1) the total volume and nature of that market; and (2) the manner in which that market has been impacted by defendants' mandatory meal plan, and more specifically, how much money would have been spent in that market had the meal plan not been mandatory. If in these affidavits plaintiffs fail to put forth evidence sufficient to warrant a trial, the Court will grant the Soundview defendants' motion for summary judgment.

 It is SO ORDERED.


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