Silicon Valley billionaires have cleared a legal hurdle in their fight to wrestle $510 million from Solano County farmers accused of colluding to jack up land prices for the city named California Forever.
A federal judge has denied an attempt by farmers to have a lawsuit filed by Flannery Associates, doing business as California Forever, tossed out of court, the San Jose Mercury News reported.
In May last year, the Folsom-based firm sued dozens of Solano County landowners, claiming that through “endless greed” they had conspired to jack up sale prices for their properties in violation of federal antitrust law.
The firm, backed by such Silicon Valley billionaires as Marc Andreessen, Michael Moritz and Laurene Powell Jobs, sought $510 million in damages. Some ranchers settled with Flannery, which has spent more than $800 million on agricultural land for a utopian city.
Judge Troy Nunley in Sacramento U.S. District Court denied an attempt by the remaining landowners to get the case thrown out, a win for the controversial development.
The farmers deny any price fixing.
But Nunley cited messages in 2022 between property owners that he said provided evidence to back Flannery’s claims of a price-fixing conspiracy.
The California Forever project, planned near Fairfield and Travis Air Force Base, drew a national spotlight a year ago after it was revealed that seven billionaires had secretly bought up 55,000 acres for a future city some 80 miles from Silicon Valley.
California Forever, envisioned and led by former Wall Street trader Jan Sramek, would create a ground-up city for up to 400,000 people. The new city would include thousands of homes and contain urban features such as offices, factories, roads, schools, transit and parks.
The company plans to put an initiative on the Solano County ballot in November to rezone 18,600 acres for the project.
A grassroots group dubbed Solano Together has formed to fight the ballot initiative. The coalition is led by the Greenbelt Alliance and endorsed by the Sierra Club.
While Solano County needs housing, it should be built in existing cities where infrastructure exists, not on the ranches and farms for cattle and sheep, wheat and barley, according to the group.
U.S. Rep. Mike Thompson, a Napa Democrat whose district includes the proposed city, has said he wasn’t persuaded about California Forever’s commitment to the project.
Flannery’s lawsuit against ranchers sparked outrage among some residents, leading to a series of contentious public meetings, according to the Mercury News.
Nunley’s order late last week gave substantial weight to a trio of incriminating messages among property owners. Flannery introduced the communications into the case as exhibits.
In one text message, a rancher said a Flannery property lawyer was “bullying the last of the property owners,” according to a court filing.
The rancher went on to say he had talked with another owner who agreed the “remaining property owners should be in agreement on what we would want to sell our properties” so the lawyer could not “play owners against owners.” The rancher concluded by saying, “I think we should have a meeting in the next two weeks to talk.”
Nunley wrote in his order that he agreed with Flannery that the message amounted to “direct evidence” of a price-fixing agreement among property owners whose land was sought by Flannery.
Antitrust law says a group of property owners can be found liable for price fixing if they enter into a clear agreement to drive prices up, Donald Polden, an antitrust law expert at Santa Clara University, told the Mercury News.
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But just because Nunley found the messages to be plausible evidence of a possible price-fixing conspiracy doesn’t mean Flannery will be able to win its case, or even keep it going until it gets to a jury, Polden said.
He said the messages, on their own, fall far short of what’s required for the case to survive summary judgment.
“It’s going to be an incredibly difficult evidentiary burden,” Polden told the newspaper. Flannery will have to “come forward and say, ‘Here’s how the conspiracy really worked and here’s how the (property owners) engaged in a common enterprise to achieve a market-wide increase of land prices in Solano County.’”
— Dana Bartholomew