## Facts

- Tops Markets, Inc. and Quality Markets, Inc. competed in retail supermarkets in western New York.
- Tops decided to reenter the Jamestown, New York supermarket market and targeted a Washington Street site requiring assembly of multiple parcels, including four owned by developer James V. Paige, Jr.
- Tops and Paige contracted for Paige to sell his four parcels to Tops and to secure options on additional parcels; closing was contingent on Paige obtaining those options.
- After learning of Tops’s plan, Quality, Penn Traffic (Quality’s parent), and Sunrise Properties (Penn’s subsidiary) negotiated with Paige to buy two noncontiguous parcels at the same site.
- Quality paid a premium for the parcels and recorded restrictive covenants barring supermarket development.
- Quality’s purchases were conditioned on Paige terminating his contract with Tops; Paige canceled Tops’s contract and sold the two parcels to Quality subject to the restrictions.
- Tops later obtained the site through eminent domain and opened a Jamestown store in 1997.
- Tops sued alleging Sherman Act § 1 and § 2 violations and state-law claims; Paige asserted state-law counterclaims.

## Issues

1. Whether defendants’ parcel acquisitions and restrictive covenants constituted an unreasonable restraint of trade under Sherman Act § 1.
2. Whether the Quality defendants had monopoly power sufficient for Sherman Act § 2 monopolization.
3. Whether evidence supported Sherman Act § 2 attempted monopolization, including specific intent, anticompetitive conduct, and a dangerous probability of achieving monopoly power.
4. Whether the district court properly dismissed state-law claims and counterclaims without prejudice after disposing of the federal claims.

## Decision

- Affirmed summary judgment for defendants on the Sherman Act § 1 restraint-of-trade claim.
- Affirmed summary judgment for defendants on the Sherman Act § 2 monopolization claim.
- Reversed summary judgment on Tops’s Sherman Act § 2 attempted monopolization claim against the Quality defendants and remanded for further proceedings.
- Affirmed summary judgment in favor of Paige on the federal antitrust claims.
- Affirmed dismissal without prejudice of state-law claims and counterclaims based on discretionary refusal to exercise supplemental jurisdiction.

## Legal Principles

- Attempted monopolization under Sherman Act § 2 requires proof of a relevant market, anticompetitive or predatory conduct, specific intent to monopolize, and a dangerous probability of achieving monopoly power.
- Evidence that a firm with substantial market position paid above-market prices for strategically important property, imposed restrictive covenants to prevent rival entry, and conditioned purchases on termination of a rival’s site contract can permit a jury finding of specific intent and dangerous probability.
- Monopolization requires existing monopoly power (including power to control prices or exclude competition), not merely strong market position or aggressive conduct.
- Conduct potentially supporting § 2 attempted monopolization does not necessarily establish a § 1 unreasonable restraint of trade where the challenged agreements are transaction-specific and do not show a broader marketwide concerted restraint.
- A noncompetitor real-estate seller generally is not liable for attempted monopolization absent evidence of the requisite antitrust intent and involvement beyond ordinary profit-seeking.
- When federal claims are dismissed before trial, dismissal of related state claims without prejudice is ordinarily within the district court’s discretion.

## Conclusion

The Second Circuit held that targeted site-control tactics and restrictive covenants used to block a rival’s market entry could support a Sherman Act § 2 attempted monopolization claim, while affirming dismissal of § 1 and completed monopolization theories and leaving state-law disputes for state court absent supplemental jurisdiction.


Tops Markets, Inc. v. Quality Markets, Inc., 142 F.3d 90 (2d Cir. 1998)