Judge Clears Way for Showdown on Convention Center Exclusives

HIL ANDERSON, SENIOR EDITOR
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San Diego, CA – The debate over the legal right of convention centers to effectively bar private service contractors from working trade shows moved closer to a trial by jury this month when a Federal judge in San Diego rejected Homeland Security as the justification for such a policy.

U.S. District Court Judge Roger Benitez ruled August 1 that the San Diego Convention Center Corp., Inc. (SDCCC), had produced no evidence to back up its claim that it was necessary to ban employees of Chicago-based United National Maintenance, Inc. from performing booth-cleaning services at the San Diego Convention Center in order to comply with a 2003 executive order from the governor of California directing state and local governments to improve security against a terrorist attack.

Benitez said in the 16-page ruling, “Notably absent are any memoranda, minutes, board resolutions, or similar documents from the defendant (SDCCC) showing that the Executive Order or homeland security was discussed in connection with the 2007 policy.”

Benitez’s ruling rejected the SDCCC’s request for a summary judgment that would have dismissed United’s anti-trust lawsuit. The ruling set the stage for a trial on several issues, including competition, which could begin early next year depending on the judge’s calendar. A status conference on the case will be held December 6.

“The focus of this case is now strictly on our contention that the (SDCCC’s) motive was financial and was meant to increase their revenues,” said James Lance, one of the San Diego attorneys litigating the case for United National Maintenance. “The question is, if the SDCCC can’t do it the old-fashioned way through fair competition, can they simply take it away from us?”

“We think that is anti-competitive and a violation of Federal and California state law,” Lance said. “It will be up to the jury to decide.”

United National Maintenance is a division of United Service Companies, a main source of booth cleaning in the San Diego Convention Center ever since the first show was held there more than 20 years ago. In June 2007, however, the SDCCC announced a new policy on cleaning services that required United Maintenance to employ the convention center’s workers at a higher cost than United charged its own customers. United said it was previously able to compete with the SDCCC based on lower prices before the alleged monopolistic practice was instituted by the SDCCC in 2007

“It is impossible to compete,” Lance said. “If we are going to make any money, we have to be more expensive (than the convention center) and still use the exact same workers. So, why would anyone hire us? It essentially bars us from the convention center.”

United Maintenance says the alleged anti-competitive behavior and interference with their contracts with the general service contractors cost the company in excess of $750,000 in lost revenues, an amount that could be trebled if a jury finds in the company’s favor. United could also be awarded fees that it incurred in filing this lawsuit. A favorable outcome will also make it tougher for convention centers to use access to their buildings to elbow out service contractors and claim lucrative businesses for themselves.

“This exclusionary policy that the convention center adopted only applies to trade show cleaning services, but it is potentially a first step in applying exclusive policy to other trades, depending on the outcome of this case,” Slania said.

TSE attempted to interview Carol Wallace, president & CEO of the San Diego Convention Center Corporation, however, she declined, stating, “We have a standard policy of not commenting on pending or active litigation.”

Reach James Lance at (619) 231-8666 or jlance@knlh.com; Jacob Slania at (619) 231-8666 or jslania@knlh.com; Carol Wallace at (619) 525-5101 or carol.wallace@visitsandiego.com