Duke & Co. Inc. v. Foerster, 74-2047

• Decision Date: 05 August 1975
• Docket Number: No. 74-2047,74-2047
• Citation: 521 F.2d 1277
• Parties: 1975-2 Trade Cases 60,433 DUKE & COMPANY INC., a corporation, Appellant, v. Thomas J. FOERSTER, Individually and as Commissioners of the County of Allegheny, et al.
• Court: U.S. Court of Appeals — Third Circuit

Page 1277

521 F.2d 1277

1975-2 Trade Cases 60,433

DUKE & COMPANY INC., a corporation, Appellant, v. Thomas J. FOERSTER, Individually and as Commissioners of the County of Allegheny, et al.

No. 74-2047.

United States Court of Appeals Third Circuit.

Argued April 18, 1975.

Decided Aug. 5, 1975.

Howard A. Specter, Edward C. Smith, Harry J. Gruener, Litman, Litman, Harris & Specter, Pittsburgh, Pa., for appellant.

Stephen A. Zappala, County Sol., Wm. R. Caroselli, Asst. County Sol., Pittsburgh, Pa., for appellee, County Stadium.

James R. Duffy, Dennis L. Veraldi, Ruffin, Hazlett, Perry & Lonergan, Pittsburgh, Pa., for appellee, Public Auditorium Authority of Pitts. and Allegheny County.

David J. Armstrong, Charles W. Kenrick, Dickie, McCamey & Chilcote, Pittsburgh, Pa., for appellee, Stadium Authority of the City of Pittsburgh.

Before SEITZ, Chief Judge, ROSENN and WEIS, Circuit Judges.

OPINION OF THE COURT

SEITZ, Chief Judge.

The complaint by Duke & Company, Inc. names seven defendants: three municipal corporations, ¹ three private corporations, ² and one individual, ³ named both in his official capacity as elected Commissioner of Allegheny County and as a private person. The district court granted a motion to dismiss the complaint as to the three municipal corporations and the individual defendant as Commissioner and certified the finality of the judgment in favor of the municipal defendants under F.R.Civ.P. 54(b). ⁴

The complaint alleges that around November 1972 the defendants "entered into an agreement, contract and/or conspiracy in restraint of trade," which violated section 1 of the Sherman Act, 15 U.S.C. § 1 (1970). The purpose of the alleged agreement was to boycott malt beverages manufactured by plaintiff in the municipal facilities operated by defendants.

In November 1972 plaintiff was engaged in the business of manufacturing and selling malt beverages in interstate commerce. The defendant municipal corporations own, and defendant private corporations are involved in the operation of three public facilities Pittsburgh Civic Arena, Three Rivers Stadium, and the Pittsburgh International Airport where sales of malt beverages are made. Prior to November 1972, plaintiff's products were sold at all three facilities. Plaintiff claims that sales of its products have been adversely affected by the alleged boycott agreement not only because the products are no longer sold in the municipal facilities under defendants' control, but also because public consumption "in Allegheny County, Western Pennsylvania and elsewhere" has decreased as a result of the alleged agreement "and notoriety given thereto."

The district court based its dismissal of the complaint against the governmental defendants on the Supreme Court's decisions in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), Eastern Railroad Presidents Conference v. Noerr Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961), Reh. den. 365 U.S. 875, 81 S.Ct. 899, 5 L.Ed.2d 864 and United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626 (1965). The court held that the three municipal defendants were immune ⁵ under the antitrust laws.

On appeal, plaintiff contends that Parker may be distinguished from the case at bar. The essence of plaintiff's argument is that Parker shields state governmental agencies with immunity from antitrust liability only when (1) any actions undertaken by the agencies that result in a restraint of trade are directed by a specific state legislative mandate, and (2) the state's purpose is sufficiently significant so as to override the federal antitrust laws or is consistent with a federal policy that overrides the antitrust laws. Plaintiff also contends that Parker precludes extension of immunity to municipal entities that conspire with private parties to violate the antitrust laws.

In rebuttal, defendants make two substantial arguments. First, they contend that under Parker they are exempt from antitrust liability when acting within the scope of their authority and exercising the powers delegated to them by law and that plaintiff's bare allegations of a combination in restraint of trade are insufficient to state a cause of action against them. Second, they contend that a government agency's response to even anti-competitive lobbying is insufficient, under Noerr and Pennington, to bring with it antitrust liability.

In reviewing the district court's dismissal of plaintiff's complaint against the governmental defendants we must construe all the allegations of the complaint in a manner most favorable to plaintiff. The sole issue for us on appeal is whether under the allegations the governmental defendants (hereinafter "defendants") are immune under the federal antitrust laws.

I. THE PARKER DOCTRINE: DELINEATION OF ANTITRUST IMMUNITY OF STATE GOVERNMENTAL ENTITIES

In Parker v. Brown, supra, the Supreme Court reviewed a California program for marketing agricultural commodities produced in the state. The program was designed to restrict competition among growers of grapes used to produce raisins and to maintain prices to packers. The program's object was to conserve "the agricultural wealth of the State" and to prevent "economic waste in the marketing of agricultural products" of the state. The Supreme Court assumed that had the program been the product of a purely private combination it would have violated the antitrust laws. Id. 317 U.S. at 350, 63 S.Ct. 307.

However, the Court found that California's program "derived its authority and its efficacy from the legislative command of the state and was not intended to operate or become effective without that command." Id. Thus, the anti-competitive effect of the program was unquestionably the result of a conscious decision by the state legislature that such a result was in the best interest of the state. The measures that restricted competition were adopted pursuant to the explicit directive of the state legislature. In this context, where the state "as sovereign, imposed the restraint as an act of government," Id. at 352, 63 S.Ct. at 314, the Court held that the Sherman Act was inapplicable. Defendants argue for a broad construction of Parker, contending that so long as they were performing governmental functions or were acting within the scope of their authority, they are shielded from antitrust liability under Parker.

The Supreme Court was recently provided with the opportunity to review its decision in Parker. In Goldfarb v. Virginia State Bar, --- U.S. ---, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), decided after the district court's judgment in the case at bar, the Court was confronted with the question of whether a minimum fee schedule published by the Fairfax County Bar Association and enforced by the Virginia State Bar constituted price fixing in violation of section 1 of the Sherman Act, 15 U.S.C. § 1 (1970). Both the district court and the Court of Appeals had held that the State Bar was immune from antitrust liability under Parker.

The Supreme Court noted that the State Bar was a state agency by law. Id. at ---, 95 S.Ct. 2014. However, the Court stated that the Bar's status as a state agency for "limited purposes" did not shield it from antitrust liability when it engaged in monopolistic activity for the benefit of its members. The Court indicated that under Parker, "(t)he threshold inquiry in determining if an anticompetitive activity is state action of the type the Sherman Act was not meant to proscribe is whether the activity is required by the State acting as sovereign." Id. at ---, 95 S.Ct. at 2015.

The Court found that the Commonwealth of Virginia could not be said to have directed the State Bar's anticompetitive activities. The State Bar was unable to point to any state statute requiring the activities in question or even mentioning fees, advisory fee schedules or the kind of minimum price schedule enforced by the State Bar. The Court concluded:

It is not enough that, as the County Bar puts it, anticompetitive conduct is "prompted" by state action; rather, anticompetitive activities must be compelled by direction of the State acting as a sovereign. Id.

We read Goldfarb as holding that, absent state authority which demonstrates that it is the intent of the state to restrain competition in a given area, Parker-type immunity or exemption may not be extended to anti-competitive government activities. Such an intent may be demonstrated by explicit language in state statutes, or may be inferred from the nature of the powers and duties given to a particular government entity. We proceed to an analysis of the statutory authority of those defendants-appellees in the light of the foregoing principles.

II. DEFENDANT'S STATUTORY AUTHORITY

Several Pennsylvania statutes relate to the powers and authority of defendant municipal corporations. Defendant County of Allegheny was organized under 16 P.S. § 3101 Et seq. (1956), as a Second Class County. It is granted the usual powers of a county government under 16 P.S. § 3202 (1956), and is specifically empowered to establish airports and terminal facilities under 16 P.S. §§ 5401-5408 (1956). In particular the County is given the power, in § 5404, to:

. . . enter into agreements in the form of a lease, permit, license, concession or otherwise for the use of the (airport or terminal facilities) or part thereof, for any adequate consideration, with any person or corporation desiring to use the same for any navigation and terminal purpose or of any air navigation and terminal facility . . . .

The County is additionally authorized to incorporate public auditorium authorities under the Public Auditorium Authorities Law, 53 P.S. § 23841 Et seq. (1957).

Defendants Public Auditorium Authority of Pittsburgh and Allegheny County

and Stadium Authority of Pittsburgh were both created under the Public Auditorium Authorities Law. Under 53 P.S. § 23845, they are empowered to exercise the...