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THE SIGHTSEEING BUS COMPANY’S COUNTERCLAIMS ALLEGING CONCERTED ANTI-COMPETITIVE BEHAVIOR BY OTHER BUS COMPANIES IN VIOLATION OF THE DONNELLY ACT (GENERAL BUSINESS LAW 340) SHOULD NOT HAVE BEEN DISMSSED (CT APP).

The Court of Appeals, reversing the Appellate Division, determined the counterclaims by a tour bus company, Go New York, alleging anti-competitive behavior in violation of the Donnelly Act by other bus companies, called the Gray Line respondents, should not have been dismissed:

The Donnelly Act prohibits “[e]very contract, agreement, arrangement or combination” through which “a monopoly . . . is or may be established or maintained,” whereby “competition or the free exercise of any activity in the conduct of business . . . is or may be restrained,” or whereby trade or business is or may be restrained “[f]or the purpose of establishing or maintaining any such monopoly or unlawfully interfering with the free exercise of any activity in the conduct of any business, trade or commerce” (General Business Law § 340 [1]). As with a claim brought “under its essentially similar federal progenitor, section 1 of the Sherman Act (15 USC § 1 et seq),” a claim brought under the Donnelly Act, at a minimum, “must allege both concerted action by two or more entities and a consequent restraint of trade within an identified relevant product market” … . The Court has recognized that “the sweep of Donnelly may be broader than that of Sherman” insofar as the Donnelly Act proscribes “arrangements” in addition to contracts, combinations, and conspiracies … . …

Go New York alleges that the Gray Line respondents conspired with other counterclaim defendants (which Go New York refers to as “Big Bus/Leisure Pass”), to leverage their market share to “shut out” Go New York from the “hop-on, hop-off sightseeing tour bus market.” According to the facts asserted—which we must accept as true on this motion—representatives from various New York City attractions refused to do business with Go New York after Gray Line and Big Bus/Leisure Pass impugned Go New York’s reputation and threatened to end their business with those attractions if they did business with Go New York. Go New York also alleged that, although certain attractions referenced exclusive relationships with either Gray Line or Big Bus/Leisure Pass as a basis not to partner with Go New York, the attractions in fact partnered with both. Thus, it can be inferred that the claimed exclusive relationships were a pretext to cover for anticompetitive efforts to exclude Go New York. Although sparse, these factual assertions and all the possible inferences to be drawn therefrom are sufficient to allege concerted action between two or more entities and support a cognizable Donnelly Act counterclaim under our liberal notice pleading standards … . Taxi Tours Inc. v Go N.Y. Tours, Inc., 2024 NY Slip Op 01333, CtApp 3-14-24

Practice Point: The allegations here were deemed sufficient to state a cause of action for a violation of the Donnelly Act, which prohibits concerted anti-competitive behavior by businesses designed to exclude a competing business from the market.

 

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