McCallum v. City of Athens, Ga.

• Decision Date: 03 November 1992
• Docket Number: No. 91-8095,91-8095
• Citation: McCallum v. City of Athens, Ga., 976 F.2d 649 (11th Cir. 1992)
• Parties: 1992-2 Trade Cases P 70,028 William McCALLUM d/b/a Green Acres Coin Laundries and Concerned Water Users of Clarke County, Plaintiffs-Appellants, v. The CITY of ATHENS, GA a/k/a The Mayor and Council of the City of Athens, GA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 649

976 F.2d 649

1992-2 Trade Cases P 70,028

William McCALLUM d/b/a Green Acres Coin Laundries and Concerned Water Users of Clarke CountyPlaintiffs-Appellants, v.The CITY of ATHENS, GA a/k/a The Mayor and Council of the City of Athens, GA, Defendant-Appellee.

No. 91-8095.

United States Court of Appeals Eleventh Circuit.

Nov. 3, 1992.

John C. Butters, Atlanta, Ga., James F. Ponsoldt, Athens, Ga., for plaintiffs-appellants.

Denny C. Galis, Galis & Packer, Athens, Ga., Robert B. Langstaff, Albany, Ga., for defendant-appellee.

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

Before TJOFLAT, Chief Judge, HATCHETT, Circuit Judge, and HENDERSON, Senior Circuit Judge.

TJOFLAT, Chief Judge:

This case involves claims under the Sherman Act,15 U.S.C. §§ 1and2 (1988), and the Robinson-Patman Act, 15 U.S.C. § 13(1988), challenging a city's allegedly anticompetitive operation of a waterworks.We find that the city's anticompetitive conduct is protected from Sherman Act liability by the state action immunity doctrine under Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315(1943), and its progeny, and that appellants have failed to demonstrate sufficient interstate commerce to support their Robinson-Patman claim.¹We therefore affirm the district court's decision granting summary judgment for the city and dismissing this case.

I.

Appellants are the "Concerned Water Users of Clarke County"("CWUCC"), an unincorporated association of over 100 members who are either commercial or residential consumers of treated water in Clarke County, Georgia, and William McCallum, the past owner of five now defunct coin-operated laundromats.Appellee is the City of Athens("Athens"), a municipality located in Clarke County.

CWUCC and McCallum brought this suit on June 29, 1984.In their complaint, they alleged that Athens had violated the Robinson-Patman Act²andsections 1and2 of the Sherman Act, ³ and sought damages and injunctive relief.According to CWUCC and McCallum, since 1916 Athens has operated a for-profit waterworks that supplies water to city residents and, for a larger fee, to customers residing outside Athens' city limits.In 1916, Athens charged nonresidents 1.25 times the resident rate, and in the early 1970s Athens increased this charge to 2.5 times the resident rate.CWUCC and McCallum allege that, without justification for the cost differential, Athens currently charges nonresidents 2.25 times the resident rate in violation of the Robinson-Patman Act.They further allege that Athens illegally agreed with the neighboring Oconee County Public Utility Authority to divide up market territory in violation of section 2 of the Sherman Act.CWUCC and McCallum contend that Athens' anticompetitive practices are responsible for Athens having a 90 percent share of the treated water business in Clarke County.

Athens moved to dismiss the Sherman ActandRobinson-Patman Act claims, arguing that it enjoyed state action immunity from federal antitrust liability.Athens also suggested that the district court lacked subject matter jurisdiction over the Robinson-Patman claim, arguing that the complaint failed to demonstrate sufficient "in commerce" sales.After Athens' city charter and other relevant Georgia statutes were brought before the district court, seeinfra at 654-55, but before the parties engaged in any discovery, the court converted Athens' motion to dismiss into a motion for summary judgment under Fed.R.Civ.P. 12(b).The court granted Athens partial summary judgment, dismissing the Sherman Act claims under the state action immunity doctrine.SeeWall v. City of Athens, 663 F.Supp. 747(M.D.Ga.1987).The court then certified the state action immunity question for interlocutory appeal pursuant to 28 U.S.C. § 1292(b).We refused, however, to entertain the appeal.Upon conclusion of the ensuing discovery, the court granted Athens summary judgment on the Robinson-Patman Act claim on the ground that CWUCC and McCallum had failed to demonstrate sufficient "in commerce" sales to support subject matter jurisdiction over the Robinson-Patman claim.⁴CWUCC and McCallum appealed to this court.We affirm.

II.

Because this case comes to us on appeal from summary judgment, ⁵we view the evidence and draw related inferences in the light most favorable to CWUCC and McCallum.SeeChapman v. American Cyanamid Co., 861 F.2d 1515, 1518(11th Cir.1988).In this part of our opinion, we consider the state action immunity issue that attends CWUCC's and McCallum's Sherman Act claims.In part III, we consider the interstate commerce deficiency of the Robinson-Patman claim.

A.

In the landmark case of Parker v. Brown, 317 U.S. 341, 352, 63 S.Ct. 307, 314, 87 L.Ed. 315(1943), the Supreme Court held that liability under the Sherman Act does not arise out of the anticompetitive conduct of states acting as sovereigns.Although "cities are not themselves sovereign," states may sanction cities' anticompetitive conduct, enshrouding the cities within the protective cloak of Parker immunity.City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 412-13, 98 S.Ct. 1123, 1136-37, 55 L.Ed.2d 364(1978).

The Supreme Court expounded upon the application of Parker's state action immunity doctrine to the anticompetitive actions of cities in Town of Hallie v. City of Eau Claire, 471 U.S. 34, 40, 105 S.Ct. 1713, 1717, 85 L.Ed.2d 24(1985).In Town of Hallie, a number of unincorporated townships alleged that the City of Eau Claire violated the Sherman Act by monopolizing the area's sewage treatment services and by refusing to provide sewage treatment to unannexed areas.Eau Claire sought Parker immunity based on a state statute that granted cities the authority to develop sewage systems and to " 'describe with reasonable particularity the district to be [served].' "Town of Hallie, 471 U.S. at 41, 105 S.Ct. at 1717(quotingWis.Stat. § 62.18(1)(1981-1982)).Acknowledging that Parker immunity applies to a city's anticompetitive conduct sanctioned by a "clearly expressed state policy," the Hallie Court applied a foreseeability test to determine whether the statute clearly expressed a state policy allowing anticompetitive conduct.The Court noted that

the statutes clearly contemplate that a city may engage in anticompetitive conduct.Such conduct is a foreseeable result of empowering the City to refuse to serve unannexed areas.It is not necessary ... for the statelegislature to have stated explicitly that it expected the City to engage in conduct that would have anticompetitive effects....[Rather,] it is sufficient that the statutes authorized the City to provide sewage services and also to determine the areas to be served.We think it is clear that anticompetitive effects logically would result from this broad authority to regulate.

Id., 471 U.S. at 42, 105 S.Ct. at 1718(citations omitted);see alsoCity of Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135("state policy ... [must be] clearly articulated and affirmatively expressed").In short, the Court extended Parker's state action immunity doctrine to the city's anticompetitive conduct that was the foreseeable result of the state's express enactments.SeeConsolidated Gas Co. v. City Gas Co., 912 F.2d 1262, 1329(11th Cir.1990)(Tjoflat, C.J., dissenting)(Under Town of Hallie, "if the legislature, by displacing competition in a given field with a broad regulatory structure, has contemplated that such [anticompetitive] conduct might occur, that will satisfy the 'clearly articulated' requirement.").

The Supreme Court's most recent pronouncement on municipal state action immunity, City of Columbia v. Omni Outdoor Advertising, Inc., --- U.S. ----, 111 S.Ct. 1344, 113 L.Ed.2d 382(1991), further entrenched foreseeability as the standard for determining whether cities act pursuant to "clearly articulated and affirmatively expressed" state policy.In City of Columbia, a city passed an extremely restrictive billboard zoning regulation that effectively preserved one billboard company's existing monopoly.Responding to a potential competitor's antitrust challenge to the city's action, the city sought state action immunity under Parker.The Court held that the city was immune from federal antitrust liability under Parker.Instructively, the Court held that to enjoy immunity from federal antitrust liability, the city must establish that (1)the state has generally authorized the city to perform the challenged action, and (2) the "suppression of competition is the 'foreseeable result' of what the statute authorizes."City of Columbia, --- U.S. at ----, 111 S.Ct. at 1350.⁶

CWUCC and McCallum argue that Georgia's enabling legislation authorizing the creation of Athens' water distribution system does not constitute a sufficiently clear expression of state policy.⁷We disagree.As we discuss below, Georgia's extensive statutory regime governing municipal waterworks indicates that Georgia has "clearly articulated and affirmatively expressed" a state policy to displace competition in the provision of water treatment services.We begin by comparing Georgia's statutes in the instant case with those found to be sufficiently clear in three paradigmatic cases, one from the Supreme Court and two from this court.We conclude by considering additional Georgia enactments that further reveal the state's contemplation of municipal anticompetitive conduct.

B.

Initially, we compare the Georgia statutes relating to municipal waterworks in this case with the Wisconsin statutes relating to municipal sewage systems in Town of Hallie.The Town of Hallie Court found two statutory grants of authority sufficient to articulate clearly and express affirmatively a state policy permitting anticompetitive conduct.The Court found that "it is sufficient that the statutes authorized the City to provide sewage services and also to determine the areas to be served.We think it is...