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American Motor Inns, Inc. v. Holiday Inns, Inc.

521 F.2d 1230 (1975)

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American Motor Inns, Inc. v. Holiday Inns, Inc.

United States Court of Appeals for the Third Circuit

521 F.2d 1230 (1975)

Facts

American Motor Inns, Inc. (AMI) (plaintiff) purchased land near a New Jersey airport and applied to Holiday Inns, Inc. (Holiday Inn) (defendant) to franchise a Holiday Inn hotel on the land. Holiday Inn operated some of its branded hotels and franchised others. At the time, AMI was Holiday Inn’s largest franchisee. Holiday Inn reached out to three of its franchisees with hotels closest to AMI’s proposed location and asked for their opinions of the new location. One franchisee objected, and Holiday Inn rejected AMI’s request. AMI sued in the United States District Court for the District of New Jersey. After a bench trial, the court found in AMI’s favor. The court concluded that Holiday Inn treated its current franchisee’s objection as a veto that enabled Holiday Inn’s existing franchisees in that geographic area to divide the market between themselves, precluding competition and creating a horizontal market allocation in violation of the Sherman Act. Holiday Inn appealed.

Rule of Law

Issue

Holding and Reasoning (Adams, J.)

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