435 U.S. 389 (1978), 76-864, City of Lafayette v. Louisiana Power & Light Co.

Docket Nº:No. 76-864
Citation:435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364
Party Name:City of Lafayette v. Louisiana Power & Light Co.
Case Date:March 29, 1978
Court:United States Supreme Court
 
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Page 389

435 U.S. 389 (1978)

98 S.Ct. 1123, 55 L.Ed.2d 364

City of Lafayette

v.

Louisiana Power & Light Co.

No. 76-864

United States Supreme Court

March 29, 1978

Argued October 4, 1977

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Syllabus

Petitioner cities, which own and operate electric utility systems both within and beyond their respective city limits as authorized by Louisiana law, brought an action in District Court against respondent investor-owned electric utility with which petitioners compete, alleging that it committed various federal antitrust offenses that injured petitioners in the operation of their electric utility systems. Respondent counterclaimed, alleging that petitioners had committed various antitrust offenses that injured respondent in its business and property. Petitioners moved to dismiss the counterclaim on the ground that, as cities and subdivisions of the State, the "state action" doctrine of Parker v. Brown, 317 U.S. 341, rendered federal antitrust laws inapplicable to them. The District Court granted the motion, but the Court of Appeals reversed and remanded.

Held: Apart from whether petitioners are exempt from the antitrust laws as agents of the State under the Parker doctrine, there are insufficient grounds for inferring that Congress did not intend to subject cities to antitrust liability. Pp. 394-408.

(a) The definition of "person" or "persons" covered by the antitrust laws clearly includes cities, whether as municipal utility operators suing as plaintiffs seeking damages for antitrust violations or as such operators being sued as defendants. Chattanooga Foundry & Pipe Works v. Atlanta, 203 U.S. 390; Georgia v. Evans, 316 U.S. 159. Pp. 394-397.

(b) Petitioners have failed to show the existence of any overriding public policy inconsistent with a construction of coverage of the antitrust laws. The presumption against implied exclusion from such laws cannot be negated either on the ground that it would be anomalous to subject municipalities [98 S.Ct. 1125] to antitrust liability or on the ground that the antitrust laws are intended to protect the public only from abuses of private power, and not from action of municipalities that exist to serve the public weal. Pp. 400-408.

MR. JUSTICE BRENNAN, joined by MR. JUSTICE MARSHALL, MR. JUSTICE POWELL, and MR. JUSTICE STEVENS, concluded:

1. Parker v. Brown does not automatically exempt from the antitrust

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laws all governmental entities, whether state agencies or subdivisions of a State, simply by reason of their status as such, but exempts only anticompetitive conduct engaged in as an act of government by the State as sovereign, or by its subdivisions, pursuant to state policy to displace competition with regulation or monopoly public service. Pp. 408-413.

2. The Court of Appeals did not err in holding that further inquiry should be made to determine whether petitioners' actions were directed by the State, since, when the State itself has not directed or authorized an anticompetitive practice, the State's subdivisions, in exercising their delegated power, must obey the antitrust laws. While a subordinate governmental unit's claim to Parker immunity is not as readily established as the same claim by a state government, sued as such, an adequate state mandate for anticompetitive activities of cities and other subordinate governmental units exists when it is found,

from the authority given a governmental entity to operate in a particular area, that the legislature contemplated the kind of action complained of.

Pp. 413-417.

THE CHIEF JUSTICE, while agreeing with the directions for remand in Part III because they represent, at a minimum, what is required to establish an exemption, would insist that the State compel the alleged anticompetitive activity, and that the cities demonstrate that the exemption is essential to the state regulatory scheme. Pp. 425-426, and n. 6.

532 F.2d 431, affirmed.

BRENNAN, J., announced the judgment of the Court and delivered the opinion of the Court with respect to Part I, in which BURGER, C.J., and MARSHALL, POWELL, and STEVENS, JJ., joined; and an opinion with respect to Parts II and III, in which MARSHALL, POWELL, and STEVENS, JJ., joined. MARSHALL, J., filed a concurring opinion, post, p. 417. BURGER, C.J., filed an opinion concurring in part and concurring in the judgment, post, p. 418. STEWART, J., filed a dissenting opinion, in which WHITE and REHNQUIST, JJ., joined, and in all but Part II-B of which BLACKMUN, J., joined, post, p. 426. BLACKMUN, J., filed a dissenting opinion, post, p. 441.

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BRENNAN, J., lead opinion

MR. JUSTICE BRENNAN delivered the opinion of the Court (Part I), together with an opinion (Parts II and III), in which MR. JUSTICE MARSHALL, MR. JUSTICE POWELL, and MR. JUSTICE STEVENS joined.

Parker v. Brown, 317 U.S. 341 (1943), held that the federal antitrust laws do not prohibit a State "as sovereign" from imposing certain anticompetitive restraints "as an act of government." The question in this case is the extent to which the antitrust laws prohibit a State's cities from imposing such anticompetitive restraints.

Petitioner cities are organized under the laws of the State of Louisiana,1 which grant them power to own and operate electric utility systems both within and beyond their city limits.2 Petitioners brought this action in the District Court for the Eastern District of Louisiana, alleging that, among others,3 Louisiana Power & Light Co. (LP&L), an investor-owned electric service utility with which petitioners compete

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in [98 S.Ct. 1126] the areas beyond their city limits,4 committed various antitrust offenses which injured petitioners in the operation of their electric utility systems.5 LP&L counterclaimed, seeking damages and injunctive relief for various antitrust offenses which petitioners had allegedly committed and which injured it in its business and property.6

Petitioners moved to dismiss the counterclaim on the ground that, as cities and subdivisions of the State of Louisiana, the "state action" doctrine of Parker v. Brown rendered federal antitrust laws inapplicable to them. The District Court granted the motion, holding that the decision of the Court of Appeals for the Fifth Circuit in Saenz v. University Interscholastic League, 487 F.2d 1026 (1973), required dismissal, notwithstanding that "[t]hese plaintiff cities are engaging in what is clearly a business activity . . . in which a profit is realized," and "for this reason . . . , this court is reluctant to

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hold that the antitrust laws do not apply to any state activity."7 App. 47 (emphasis in original). The District Court in this case read Saenz to interpret the "state action" exemption8 as requiring the "holding that purely state government activities are not subject to the requirements of the antitrust laws of the United States," App. 48, thereby making petitioners' status as cities determinative against maintenance of antitrust suits against them. The Court of Appeals for the Fifth Circuit reversed and remanded for further proceedings.9 532 F.2d 431 (1976). The Court of Appeals noted that the District Court had acted before this Court's decision in Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975), and held that, "taken together" Parker v. Brown and Goldfarb "require the following analysis":

A subordinate state governmental body is not ipso facto exempt from the operation of the antitrust laws. Rather, a district court must ask whether the state [98 S.Ct. 1127] legislature contemplated a certain type of anticompetitive restraint. In our opinion, though, it is not necessary to point to an

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express statutory mandate for each act which is alleged to violate the antitrust laws. It will suffice if the challenged activity was clearly within the legislative intent. Thus, a trial judge may ascertain, from the authority given a governmental entity to operate in a particular area, that the legislature contemplated the kind of action complained of. On the other hand, as in Goldfarb, the connection between a legislative grant of power and the subordinate entity's asserted use of that power may be too tenuous to permit the conclusion that the entity's intended scope of activity encompassed such conduct. Whether a governmental body's actions are comprehended within the powers granted to it by the legislature is, of course, a determination which can be made only under the specific facts in each case. A district judge's inquiry on this point should be broad enough to include all evidence which might show the scope of legislative intent.

532 F.2d at 434-435 (footnotes omitted). We granted certiorari, 430 U.S. 944 (1977). We affirm.

I

Petitioners' principal argument is that,

since a city is merely a subdivision of a state, and only exercises power delegated to it by the state, Parker's findings regarding the congressionally intended scope of the Sherman Act apply with equal force to such political subdivisions.

Brief for Petitioners 5. Before addressing this question, however, we shall address the contention implicit in petitioners' arguments in their brief that, apart from the question of their exemption as agents of the State under the Parker doctrine, Congress never intended to subject local governments to the antitrust laws.

A

The antitrust laws impose liability on and create a cause of action for damages for a "person" or "persons" as defined in

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the Acts.10 Since the Court has held that the definition of "person" or "persons" embraces both cities and States, it is understandable that the cities do not argue that they are not "persons" within the meaning of the antitrust laws.

Section 8 of the Sherman Act, ch. 647, 26 Stat. 210, 15 U.S.C. § 7 (1976 ed.), and § 1 of the Clayton Act, 38 Stat. 730, 15 U.S.C. § 12 (1976 ed.), are general definitional sections...

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