Ellis v. Salt River Project Agric. Improvement & Power Dist.

• Decision Date: 31 January 2022
• Docket Number: Nos. 20-15301,20-15476,s. 20-15301
• Citation: 24 F.4th 1262
• Parties: William ELLIS ; Robert Dill; Edward Rupprecht; Robert Gustavis, individually and on behalf of all others similarly situated, Plaintiffs-Appellants/Cross-Appellees, v. SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, Defendant-Appellee/Cross-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

24 F.4th 1262

William ELLIS ; Robert Dill; Edward Rupprecht; Robert Gustavis, individually and on behalf of all others similarly situated, Plaintiffs-Appellants/Cross-Appellees,

v.SALT RIVER PROJECT AGRICULTURAL IMPROVEMENT AND POWER DISTRICT, Defendant-Appellee/Cross-Appellant.

Nos. 20-15301

20-15476

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 2, 2021 Phoenix, Arizona

Filed January 31, 2022

Hart L. Robinovitch (argued), Zimmerman Reed LLP, Scottsdale, Arizona; David M. Cialkowski and Alia M. Abdi, Zimmerman Reed LLP, Minneapolis, Minnesota; Daniel E. Gustafson, Daniel C. Hedlund and Daniel J. Nordin, Gustafson Gluek PLLC, Minneapolis, Minnesota; for Plaintiffs-Appellants/Cross-Appellees.

Daniel S. Volchok (argued), Christopher E. Babbitt, and David Gringer, Wilmer Cutler Pickering Hale and Dorr LLP, Washington, D.C.; Elizabeth Bewley, Wilmer Cutler Pickering Hale and Dorr LLP, Boston, Massachusetts; Eric Dell Gere, Jennings Strouss & Salmon PLC, Phoenix, Arizona; for Defendants-Appellees/Cross-Appellants.

Matthew C. Mandelberg (argued), Daniel E. Haar, and Steven J. Mintz, Attorneys; Andrew J. Robinson, Counsel to the Assistant Attorney General; Michael F. Murray, Deputy Assistant Attorney General; Makan Delrahim, Assistant Attorney General; United States Department of Justice, Antitrust Division, Washington, D.C.; for Amicus Curiae United States of America.

Howard M. Crystal and Anchun Jean Su, Center for Biological Diversity, Washington, D.C., for Amici Curiae Center for Biological Diversity, Food and Water Watch, Friends of the Earth Inc., Institute for Local Self-Reliance, and N.C. Warn Inc.

Before: William A. Fletcher, Eric D. Miller, and Danielle J. Forrest,^* Circuit Judges.

OPINION

MILLER, Circuit Judge:

Salt River Project Agricultural Improvement and Power District (SRP) is a power and water utility that services most of the Phoenix metropolitan area. In 2015, SRP increased prices for customers with solar-energy systems. Plaintiffs William Ellis, Robert Dill, Edward Rupprecht, and Robert Gustavis (collectively, "Ellis") sued SRP under federal and state law, alleging that the new price plan unlawfully discriminates against customers with solar-energy systems and was designed to stifle competition in the electricity market. The district court dismissed the complaint in its entirety. Ellis appeals the dismissal of his claims, and SRP cross-appeals the district court's rejection of certain of its affirmative defenses. We affirm the district court's dismissal of Ellis's state-law claims but reverse the dismissal of the federal claims and remand for further proceedings.

I

Because the district court resolved this case on a motion to dismiss, we assume the truth of the facts as set out in the complaint. Wojciechowski v. Kohlberg Ventures, LLC , 923 F.3d 685, 688 n.2 (9th Cir. 2019).

SRP is a political subdivision of the State of Arizona. Ariz. Rev. Stat. Ann. § 48-2302. It controls the electrical grid and has authority to set prices for the sale and distribution of electricity to the approximately one million retail customers in its service territory. It supplies more than 95 percent of the electricity used by those customers.

Some of SRP's customers have chosen to install solar-energy systems, such as rooftop solar panels, thereby reducing the amount of electricity they need to purchase from SRP. But solar energy is not always available, and customers with solar installations must still rely on SRP when their solar-energy systems do not produce electricity or produce less electricity than they need.

In the past, SRP encouraged the use of solar-energy systems. For example, its net metering program gave customers credit on their bill for generating excess electricity, which was transmitted through the grid and purchased at retail rates by other customers. SRP also attempted to enter the solar-energy market itself, but when that effort faltered, it eliminated incentives to install solar-energy systems. Even so, SRP's service territory has one of the highest rates of solar installation in the nation.

In 2014, SRP announced a new pricing scheme that included various "Standard Electric Price Plans." One of those plans, the E-27 price plan, established separate rates for customers who generate their own electricity through solar-energy systems. The E-27 plan applies only to customers who installed solar panels after December 8, 2014; those who had already installed solar panels were grandfathered into the previous pricing scheme. Under the E-27 plan, solar customers can be charged up to 65 percent more for SRP electricity than under prior plans for solar customers.

In February 2015, the SRP board of directors approved the new pricing scheme. At the same time, it adopted a rate increase for its non-solar customers of only about 3.9 percent. After adopting the new pricing scheme, SRP undertook a $1.7 million advertising campaign to promote its increased rates for solar customers. Not surprisingly, applications for solar-energy systems in SRP territory decreased by between 50 and 96 percent.

Ellis is an SRP customer who is subject to the new E-27 price plan. He sued SRP in federal court on behalf of a putative class of similarly situated customers. In his first amended complaint (the operative pleading here), he asserted claims under the Sherman Act, 15 U.S.C. § 2 ; various Arizona consumer protection, antitrust, and price discrimination laws; and the equal protection clauses of the United States and Arizona constitutions. Ellis alleged that the E-27 price plan "discriminates against customers that use solar energy systems and disincentivizes further purchases and use of solar energy systems" by eliminating "the economic value in investing in solar energy systems to self-generate electricity," leading customers "to obtain their electrical power needs exclusively from SRP." According to Ellis, "[t]he E-27 price plan makes it impossible for solar customers to obtain any viable return on a solar energy system investment, thereby eliminating any competition from solar energy."

The district court dismissed the complaint in its entirety. First, the district court held that the state-law claims were barred because Ellis did not comply with Arizona's notice-of-claim statute by filing an appropriate claim with SRP before bringing suit. See Ariz. Rev. Stat. Ann. § 12-821.01. Second, it dismissed the federal equal protection claim as untimely. Third, although it held inapplicable the filed-rate and state-action-immunity doctrines, it dismissed the federal antitrust claims for failure to allege antitrust injury. It also concluded that the Local Government Antitrust Act (LGAA), 15 U.S.C. §§ 34 – 36, shields SRP from federal antitrust damages.

Ellis appeals. Because the district court granted Ellis leave to amend his federal antitrust claims, SRP cross-appeals the district court's rejection of its alternative grounds for dismissal, which, if accepted, would have resulted in a dismissal with prejudice. But Ellis did not file an amended complaint within the time allotted by the district court, and the district court subsequently entered an order terminating the case. Because that order did not specify otherwise, it "operates as an adjudication upon the merits," or in other words as a dismissal with prejudice. Stewart v. U.S. Bancorp , 297 F.3d 953, 956 (9th Cir. 2002) (quoting Fed. R. Civ. P. 41(b) ). Thus, SRP has already obtained the judgment it now seeks through its cross-appeal. An appellee must cross-appeal to obtain "relief more extensive than [that] received from the district court," Dodd v. Hood River County , 59 F.3d 852, 864 (9th Cir. 1995), but it should not cross-appeal if all it wishes to do is present alternative grounds for affirming the judgment, Spencer v. Peters , 857 F.3d 789, 797 n.3 (9th Cir. 2017) ; see, e.g., El Paso Nat. Gas Co. v. Neztsosie , 526 U.S. 473, 479, 119 S.Ct. 1430, 143 L.Ed.2d 635 (1999). SRP's cross-appeal is therefore unnecessary; the arguments SRP advances in the cross-appeal should simply have been asserted as alternative grounds for affirmance in SRP's appellee's brief. But we may affirm on any ground supported by the record, so we will proceed to consider the issues raised in both appeals. See Spencer , 857 F.3d at 797 n.3.

II

We first consider whether Arizona's notice-of-claim statute applies in federal court and, if so, whether Ellis satisfied it. We hold that the statute applies and that Ellis did not comply with its terms, so it bars his state-law claims.

Under Arizona law, "[p]ersons who have claims against a public entity" such as SRP must file a claim with the entity "within [180] days after the cause of action accrues ... contain[ing] a specific amount for which the claim can be settled." Ariz. Rev. Stat. Ann. § 12-821.01(A). A claim that is not so filed "is barred and no action may be maintained thereon." Id. ; see Deer Valley Unified Sch. Dist. No. 97 v. Houser , 214 Ariz. 293, 152 P.3d 490, 492 (2007).

The statute poses a dilemma for those seeking to bring a class action: "Persons filing a claim with a public entity do not yet represent a class," so they "have authority to settle only their individual claims." City of Phoenix v. Fields , 219 Ariz. 568, 201 P.3d 529, 533 (2009). That means that those seeking to assert a class claim are unable to "set forth a ‘specific amount’ for which the claim of the entire class ‘can be settled.’ " Id. (quoting Ariz. Rev. Stat. Ann. § 12-821.01(A) ). To resolve that dilemma, the Arizona Supreme Court has interpreted section 12-821.01(A) to allow a would-be class representative to "include in his notice of claim a ‘specific amount’ for which his individual claim can be settled," together with "a statement that, if litigation ensues, the representative intends to seek certification of a plaintiff class." Id. at 534. "If a class is later certified, the notice of claim will serve as a representative notice for other class...