Analyzing Refusal-to-Deal Cases under Brooke Group's Predatory Pricing Test: The Tenth Circuit Misses the Mark in Christy Sports, LLC V. Deer Valley Resort Co
I. INTRODUCTION In Christy Sports, LLC v. Deer Valley Resort Co., the Tenth Circuit held that Deer Valley Resort Co. (Deer Valley) did not have a duty to deal Christy Sports, LLC (Christy Sports), a snow ski rental company, and that it did not violate § 2 of the Sherman Act1 (§ 2) when it began to exercise a restrictive covenant after many years of non-enforcement.2 The Christy Sports court confronted the issue of whether Deer Valley, in fight of antitrust law, could lawfully exercise its land sale agreement's restrictive covenant.3 Ultimately, the court allowed Deer Valley to terminate its working relationship Christy Sports even though such action would likely result in Deer Valley obtaining monopoly power in renting skis at the resort.4 Relying on earlier Tenth Circuit and United States Supreme Court decisions, the Tenth Circuit held that Deer Valley and Christy Sports did not enjoy a relationship sufficient to bind Deer Valley to continue dealing Christy Sports. The decision attempted to draw the boundaries for § 2 refusal-to-deal monopolization claims5 based on a business relationship rule.6 Rather than using the hard-tofollow business relationship rule, however, the Tenth Circuit should have employed the tried and proven predatory pricing analysis as used in the Unites States Supreme Court case of Brooke Group Ltd. v. Brown & Williamson Tobacco Corp.7 II. FACTS AND PROCEDURAL HISTORY Utah's claim to being the home of the greatest snow on earth8 is supported by the number of skiers who travel to Utah to enjoy the state's pristine, snowy mountain slopes.9 Deer Valley is one of three large ski resorts in the world-renowned skiing haven of Park City, Utah.10 Most of Deer Valley's patrons are destination skiers; they fly into Salt Lake City and take a shuttle to the resort where they lodge and ski down Deer Valley's slopes.11 In 1990, Deer Valley sold a parcel of commercial property in its up-scale, mid-mountain village subject to a restrictive covenant that prohibited use of the property for . . . ski rental . . . purposes without [Deer Valley's] express written consent.12 The buyers erected a commercial building at the mid-mountain village and leased space in the building to Bulrich Corporation (Bulrich).13 In accord the restrictive covenant, Bulrich's lease agreement initially prohibited using the space for renting skis.14 One year later, Deer Valley granted Bulrich permission to rent skis in return for 15% of the revenues.15 In 1994, Bulrich merged another company to form Christy Sports.16 Christy Sports continued to rent skis at the mid-mountain village until 2005. 17 However, in 1995, for reasons unknown at the time of the case, Christy Sports discontinued paying Deer Valley 15% of the rental revenues as previously agreed upon.18 In 2005, Deer Valley opened its own ski rental facility at the mid-mountain village; Deer Valley notified Christy Sports that the restrictive covenant would be enforced and Christy Sports would no longer be allowed to rent skis at the mid-mountain location.19 By exercising the restrictive covenant, Deer Valley positioned itself not only as the sole purveyor of ski rentals at the mid-mountain village, but at the entire resort.20 By eliminating the ski rental competition from within its resort, Deer Valley left destination skiers with few choices: they [could] carry unwieldy ski equipment onto the plane, take a shuttle into Park City and hunt for cheaper ski rentals in town, or rent from the more conveniently located [Deer Valley] location.21 Christy Sports filed a complaint, arguing that Deer Valley's exercise of the restrictive covenant was anticompetitive and would result in a monopoly for Deer Valley in which it could charge destination skiers artificially inflated prices for ski rentals.22 Christy Sports argued that consumers would not only face increased prices, but also decreased selection. …