Municipal Utilities Bd. of Albertville v. Alabama Power Co.

• Citation: 934 F.2d 1493
• Decision Date: 05 July 1991
• Docket Number: No. 90-7095,90-7095
• Parties: 1991-1 Trade Cases 69,485 The MUNICIPAL UTILITIES BD. OF ALBERTVILLE; The City of Alexander City; the City of Andalusia; the City of Bessemer; the City of Brundidge; the City of Courtland; the Utilities Board of the City of Cullman, Inc.; the City of Decatur; the City of Dothan; the City of Evergreen; the City of Fairhope; the City of Florence; the Utilities Board of the City of Foley; the Fort Payne Improvement Authority; the Electric Board of Guntersville; the City of Hartford; the Electric Board of the City of Hartselle; the City of Huntsville; the City of Lafayette; the City of Lanett; the Electric Board of the City of Luverne; the Electric Board of the City of Muscle Shoals; the City of Opelika; the Utilities Board of the City of Opp; the City of Piedmont; the City of Robertsdale; the Scottsboro Electric Power Board; the Utilities Board of the City of Sylacauga; the City of Tuscumbia and the Utilities Board of the City of Tuskegee, Plaintiffs-Appellants, City of Lincoln, Alabama, a municipal corp., Applicant for Intervention-Appellant, v. ALABAMA POWER COMPANY; the Alabama Rural Electric Association of Cooperatives; Dixie Electric Cooperative; Covington Electric Cooperative, Inc.; Marshall-DeKalb Electric Cooperative; Southern Pine Electric Cooperative; Cherokee Electric Cooperative; Cullman Electric Cooperative; Pioneer Electric Cooperative, Inc.; Tombigbee Electric Cooperative, Inc.; Wiregrass Electric Cooperative, Inc.; Joe Wheeler Electric Membership Corporation; Clarke-Washington Electric Membership Corporation; Tallapoosa River Electric Cooperative; Pea River Electric Cooperative; Central Alabama Electric Cooperative; Sand Mountain Electric Cooperative; Franklin Electric Cooperative; North Alabama Electric Cooperative; Baldwin County Electric Membership Cooperation; Coosa Valley Electric Cooperative, Inc.; South Alabama Electric Cooperative, Inc.; Black Warrior Electric Membership Corporation; Arab Electric Cooperative, Inc. and Alabama Electric Cooperati
• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)

Page 1493

934 F.2d 1493

1991-1 Trade Cases 69,485

The MUNICIPAL UTILITIES BD. OF ALBERTVILLE; The City of

Alexander City; the City of Andalusia; the City of

Bessemer; the City of Brundidge; the City of Courtland;

the Utilities Board of the City of Cullman, Inc.; the City

of Decatur; the City of Dothan; the City of Evergreen;

the City of Fairhope; the City of Florence; the Utilities

Board of the City of Foley; the Fort Payne Improvement

Authority; the Electric Board of Guntersville; the City of

Hartford; the Electric Board of the City of Hartselle; the

City of Huntsville; the City of Lafayette; the City of

Lanett; the Electric Board of the City of Luverne; the

Electric Board of the City of Muscle Shoals; the City of

Opelika; the Utilities Board of the City of Opp; the City

of Piedmont; the City of Robertsdale; the Scottsboro

Electric Power Board; the Utilities Board of the City of

Sylacauga; the City of Tuscumbia and the Utilities Board of

the City of Tuskegee, Plaintiffs-Appellants, City of Lincoln, Alabama, a municipal corp., Applicant for Intervention-Appellant, v. ALABAMA POWER COMPANY; the Alabama Rural Electric

Association of Cooperatives; Dixie Electric Cooperative;

Covington Electric Cooperative, Inc.; Marshall-DeKalb

Electric Cooperative; Southern Pine Electric Cooperative;

Cherokee Electric Cooperative; Cullman Electric

Cooperative; Pioneer Electric Cooperative, Inc.; Tombigbee

Electric Cooperative, Inc.; Wiregrass Electric Cooperative,

Inc.; Joe Wheeler Electric Membership Corporation;

Clarke-Washington Electric Membership Corporation;

Tallapoosa River Electric Cooperative; Pea River Electric

Cooperative; Central Alabama Electric Cooperative; Sand

Mountain Electric Cooperative; Franklin Electric

Cooperative; North Alabama Electric Cooperative; Baldwin

County Electric Membership Cooperation; Coosa Valley

Electric Cooperative, Inc.; South Alabama Electric

Cooperative, Inc.; Black Warrior Electric Membership

Corporation; Arab Electric Cooperative, Inc. and Alabama

Electric Cooperative, Inc., Defendants-Appellees.

No. 90-7095.

United States Court of Appeals, Eleventh Circuit.

July 5, 1991.

Robert D. Thorington, Wendell Cauley, Johnson & Thorington, Montgomery, Ala., Maynard, Cooper, Frierson & Gale, P.C., George G. Lynn, Birmingham, Ala., and Robert A. Jablon, Barbara Eshin, Spiegel & McDiarmid, Washington, D.C., for plaintiffs-appellants.

Charles M. Crook and John Mandt, Balch & Bingham, Montgomery, Ala., for Alabama Power Co.

H.A. Lloyd, Lloyd, Dinning, Boggs & Dinning, Demopolis, Ala., for Black Warrior Elec. Membership Corp.

Edward M. Price, Jr., Farmer, Price, Smith, Hornsby & Weatherford, Dothan, Ala., for Wiregrass Elec. Co-op, Inc.

Gaines, Gaines & Gaines, George C. Douglas, Jr., Talladega, Ala., for Coosa Valley Elec.

Robert A. Huffaker, Rushton, Stakely, Johnston & Garrett, Montgomery, Ala., for all Cooperatives.

Appeal from the United States District Court for the Middle District of Alabama.

Before JOHNSON and HATCHETT, Circuit Judges, and DYER, Senior Circuit Judge.

JOHNSON, Circuit Judge:

The plaintiffs, thirty municipal and public corporations and their boards ("the Cities"), appeal the district court's order dismissing with prejudice their antitrust complaint against twenty-two rural electric cooperatives ("the Cooperatives"), the Alabama Rural Electric Association of Cooperatives ("AREA") and Alabama Power Company ("APC").

I. STATEMENT OF THE CASE ¹

A. Background Facts

The Cities, the Cooperatives, and APC all own and operate electric distribution facilities in the State of Alabama. In 1979, the Alabama Legislature established the Joint Interim Committee on Electricity ("the Committee") to develop legislation "to avoid wasteful, uneconomic duplication of electric facilities, the cost of which must be borne by the consumer." 1979 Ala.Acts 764. ² In 1984, the Legislature passed the Service Territories for Electric Suppliers Act ("the 1984 Act") for the stated purpose of limiting wasteful line duplication. Ala.Code Sec. 37-14-1 et seq. (Supp.1989). The 1984 Act assigned service territories to Alabama's electric suppliers. This legislation was subsequently held invalid by a federal district court and enjoined from enforcement. ³ In 1985, the Legislature passed a second Service Territories for Electric Suppliers Act ("the 1984 Act") in an effort to accommodate the constitutional questions raised by the district court. Ala.Code Sec. 37-14-33 (Supp.1989). ⁴ The Alabama Supreme Court then held that both Acts were valid. Alabama Power Co. v. Citizens of Ala., 527 So.2d 678 (Ala.1988).

The 1984 and 1985 Acts (collectively "the Acts") establish three sets of rules: (1) those governing activities outside existing city limits (i.e., city boundaries as of April 26, 1984); (2) those governing activities inside existing city limits; and (3) those governing the incorporation of certain listed private agreements into the Acts.

The rules governing service outside existing city limits provide that electric suppliers cannot serve premises already served by another supplier. Ala.Code Secs. 37-14-3 & 37-14-32 (Supp.1989). These rules also state that electric suppliers cannot extend their facilities to service new premises located in the service area of another supplier, except for industrial customers whose electric load exceeds 2500 kilowatts. Id. The Acts also provide detailed rules to assign specific service areas to each supplier. Id. ⁵ Finally, the Acts prohibit a municipality from serving any customers outside its boundary, even if the city annexes new territory. Id.

The rules governing service inside city limits allow the "primary electric supplier" to purchase the facilities of other suppliers within "existing municipal limits" on terms specified in the statute. Ala.Code Secs. 37-14-4 & 37-14-33 (Supp.1989). If the primary supplier elects not to purchase these facilities, the statute permits the secondary supplier to maintain these facilities and become the assigned supplier to those new customers that locate "closer to" its lines. Id.

The Acts also contain certain "special rules." Ala.Code Secs. 37-14-8 & 37-14-36 (Supp.1989). These rules incorporate into the Acts certain listed agreements ("the private agreements") previously reached by electric suppliers. According to the Acts, these agreements govern the prevention of line duplication in the areas they cover. Id. The Acts permit suppliers to enter additional agreements consistent with policies and purposes of the Acts provided the suppliers obtain the approval of the Alabama Legislature. Id. ⁶

B. Procedural History

On May 19, 1989, the Cities filed an antitrust complaint seeking declaratory and injunctive relief and damages against the Cooperatives, AREA, and APC (collectively, "the defendants") for conspiring to suppress competition in the retail electric market in violation of the Sherman Act, 15 U.S.C. Secs. 1, 2, and the Clayton Act, 15 U.S.C. Sec. 26. The Cities alleged that the defendants had illegally agreed to divide service territories horizontally and had conspired with members of the Alabama Legislature as well as officials of state government to immunize this antitrust violation by codifying this illegal agreement as the Acts. The complaint challenged all of the defendants' actions associated with this agreement, including their efforts to petition the Alabama Legislature to pass the Acts and their actions taken pursuant to the Acts. Moreover, the Cities sought an order declaring the Acts invalid and unconstitutional.

APC, AREA, and nineteen of the Cooperatives subsequently moved to dismiss the complaint for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6). Specifically, they argued that they were immune from antitrust liability under the Noerr-Pennington and state action doctrines. APC also argued that the Cities' claims were time-barred because both Acts were passed more than four years prior to the commencement of the action. Coosa Valley Electric Cooperative ("Coosa Valley") also moved to dismiss, arguing that the Cities lacked standing to assert a cause of action under 15 U.S.C. Sec. 15. The City of Lincoln, Alabama, subsequently filed a motion to intervene.

On January 9, 1990, following a hearing, the district court granted the motions to dismiss with prejudice and denied Lincoln's motion to intervene. The court found that the Cities lacked standing to bring claims for any alleged antitrust injury occurring outside the service areas assigned to them by the Acts, but had standing to bring claims for such injuries within their service areas. Nevertheless, the court dismissed these latter claims, finding that the allegedly actionable conduct was immune from antitrust liability under the Noerr-Pennington and state action doctrines.

II. ANALYSIS

A. Standing

Section 4 of the Clayton Act creates a federal cause of action available to "any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws." 15 U.S.C. Sec. 15(a). ⁷ Standing to bring an antitrust claim is a question of law which we determine by examining the allegations contained in the complaint. Todorov v. DCH Healthcare Auth., 921 F.2d 1438, 1448 (11th Cir.1991). It involves more than the "case or controversy" requirement of constitutional standing; it also includes "an analysis of prudential considerations aimed at preserving the effective enforcement of the antitrust laws." Id. (citations omitted).

In its order below, the district court found that the Cities lacked standing to assert claims for alleged antitrust injuries occurring outside the service areas assigned to them under the Acts, but had standing to bring claims for such injuries occurring within their statutory service areas. The court reasoned that the Cities had no inherent right to compete in the retail electricity market, but derived their authority to compete solely from a delegation of state power by the...