Praxair, Inc. v. Florida Power & Light Co., 94-2165

• Decision Date: 19 September 1995
• Docket Number: No. 94-2165,94-2165
• Citation: 64 F.3d 609
• Court: U.S. Court of Appeals — Eleventh Circuit
• Parties: , 1995-2 Trade Cases P 71,124, Util. L. Rep. P 14,065 PRAXAIR, INC., Plaintiff-Appellee, Cross-Appellant, v. FLORIDA POWER & LIGHT CO.; Florida Power Corp., Defendants-Appellants, Cross-Appellees.

Page 609

64 F.3d 609

64 USLW 2223, 1995-2 Trade Cases P 71,124,

Util. L. Rep. P 14,065

PRAXAIR, INC., Plaintiff-Appellee, Cross-Appellant, v. FLORIDA POWER & LIGHT CO.; Florida Power Corp.,

Defendants-Appellants, Cross-Appellees.

No. 94-2165.

United States Court of Appeals, Eleventh Circuit.

Sept. 19, 1995.

Benjamin H. Hill, III, Hill, Ward & Henderson, Tampa, FL, Daniel M. Gribbon, James R. Atwood, and Anna P. Engh, Covington & Burling, Washington, DC, for Florida Power & Light.

Nathan P. Eimer, William H. Baumgartner, Jr., Sidley & Austin, Chicago, IL, and James R. McGibbon, Sutherland, Asbill & Brennan, Washington, DC, for Praxair, Inc.

Sylvia H. Walbolt, Alan C. Sundberg, Carlton, Fields, Ward, Emmanuel, Smith & Cutler, St. Petersburg, FL, and Albert H. Stephens, Asst. Gen. Counsel, Florida Power Corp., St. Petersburg, FL, for Florida Power Corp.

Martha Carter Brown, FPSC, Tallahassee, FL, amicus brief for Florida Public Service Commission.

Appeals from the United States District Court for the Middle District of Florida.

Before COX, Circuit Judge, RONEY and WOOD ^*, Senior Circuit Judges.

RONEY, Senior Circuit Judge:

Florida Power Corp. and Florida Power & Light Co. appeal the district court's denial of their motion for summary judgment in which the utilities asserted state action immunity from Praxair, Inc.'s claim of federal antitrust liability. Praxair cross-appeals the denial of its partial summary judgment motion. At issue is whether state action can be inferred from the manner in which the State conducts itself in relation to the parties' attempts at competition. Since there was sufficient state action so that the utilities should have been granted immunity on summary judgment, we reverse the contrary decision of the district court.

Although neither party raised a question of jurisdiction, each filed briefs in response to a jurisdictional question raised by this Court. It is not necessary to discuss the jurisdictional issues. The district court granted Praxair's motion to certify for immediate appeal the court's denial of its cross-motion for summary judgment. 28 U.S.C. Sec. 1292(b). Although a prior panel of this Court denied permission, in order to remove any doubt about the jurisdiction of this panel to hear these fully argued appeals, we vacate the previous order and grant Sec. 1292(b) jurisdiction of Praxair's appeal. There is collateral order appellate jurisdiction of the appeals of Florida Power and Florida Power & Light. Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546-47, 69 S.Ct. 1221, 1225-26, 93 L.Ed. 1528 (1949). Denial of state action immunity from antitrust liability by summary judgment is immediately appealable. Commuter Transportation Systems, Inc. v. Hillsborough County, 801 F.2d 1286, 1289 (11th Cir.1986); see also Askew v. DCH Regional Health Care Authority, 995 F.2d 1033, 1036 (11th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 603, 126 L.Ed.2d 568 (1993).

This lawsuit stems from Florida Power & Light's (FPL) refusal to negotiate a lower rate for Praxair and Florida Power Corp.'s (FPC) refusal to provide service because of a 1965 territorial agreement. Praxair, and its predecessor Union Carbide, is located in Mims in Brevard County, Florida, an area historically served by Florida Power & Light and, according to the utilities, specifically allocated to FPL in the territorial agreement. Praxair contends Brevard County was never included in the agreement which the Commission approved. The question presented is whether, in the order approving the territorial agreement or in events since that time, there has been sufficient "state action" by the Florida Public Service Commission which would allow FPC and FPL to divide service territories in Brevard County without violating section 1 of the Sherman Act, 15 U.S.C. Sec. 1. We hold there has been appropriate state action.

If a territorial agreement is made effective "solely by virtue of a contract, combination or conspiracy of private persons, individual or corporate," it would violate the Sherman Act. Parker v. Brown, 317 U.S. 341, 350, 63 S.Ct. 307, 313, 87 L.Ed. 315 (1942); 15 U.S.C. Secs. 1, 2. Conduct that otherwise would violate federal antitrust laws may nevertheless be permissible when done under the aegis of the State. 317 U.S. at 350, 63 S.Ct. at 313; Municipal Utilities Board of Albertville v. Alabama Power Co., 934 F.2d 1493 (11th Cir.1991).

For private conduct to qualify for immunity under the state action doctrine, the challenged restraint must meet a two-pronged test. First, it must be "clearly articulated and affirmatively expressed as state policy." Second, "the policy must be actively supervised by the State itself." California Retail Liquor Dealers Ass'n v. Midcal Aluminum, 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980). These two requirements operate hand-in-hand to ensure that the displacement of competition occurs only as a result of deliberate and intentional state policy. Federal Trade Commission v. Ticor Title Insurance Co., 504 U.S. 621, 112 S.Ct. 2169, 119 L.Ed.2d 410 (1992). A clearly articulated policy can be established if a state statute authorizes an agency to regulate the area and "provides" for a regulatory scheme that inherently displaces unfettered business freedom. Executive Town & Country Services, Inc. v. City of Atlanta, 789 F.2d 1523, 1529 (11th Cir.1986).

As to the first prong of Midcal, the district court at first noted that "Florida case law and ... Florida's current statutory and regulatory provisions ... has effectively displaced competition between electric utilities in the retail market" and indicates a "clearly articulated and affirmatively expressed state policy" to regulate retail electric service areas. Order at 9-11. See Storey v. Mayo, 217 So.2d 304, 307 (Fla.1968) (noting that "the powers of the Commission over these privately-owned utilities is omnipotent within the confines of [Chapter 366] and the limits of organic law), cert. denied, 395 U.S. 909, 89 S.Ct. 1751, 23 L.Ed.2d 222 (1969); City Gas Co. v. Peoples Gas System, Inc., 182 So.2d 429, 435 (Fla.1965) (Chapter 366 of Florida Statutes "add up to what can be considered a very extensive authority over the fortunes and operation of the regulated entities"); Fla.Stat. Sec. 366.04(3) (directing the Commission to exercise its powers to avoid "uneconomic duplication of generation, transmission, and distribution facilities"); see also PW Ventures, Inc. v. Nichols, 533 So.2d 281, 283 (Fla.1988) (holding that "the regulation of the production and sale of electricity [under Chapter 366] necessarily contemplates the granting of monopolies in the public interest").

As to the second element of Midcal, the district court concluded that generally "the Commission's extensive control over the validity and effect of such agreements negates any inference that the privately initiated agreements lack state supervision." Order at 18. The Florida Supreme Court has held that the effect of the Commission's approval of territorial agreements between public utilities "is to make the approved contract an order of the commission, binding as such upon the parties. City Gas, 182 So.2d at 436.

Having said that, however, the district court then denied the parties' cross-motions for summary judgment on the ground there was a disputed issue of material fact concerning whether Mims was located in the area covered by the approved agreement. Praxair had argued that the Commission had never approved an agreement between the utilities that included Brevard County.

In our judgment, the district court erroneously focused primarily on the utilities' and Commission's intent in the original proceedings which culminated in the 1965 approval order, and did not give proper consideration to the parties' conduct and the Commission activity since that time.

The validity of a territorial agreement under Florida's noncompetition policy is premised on Commission approval. See City Gas, 182 So.2d at 436; Fla.Stat. Secs. 366.04(2), .05(7)-(8). If Florida Power denied service to Praxair presumably because of a territorial agreement, but the area in question was never approved by the Commission, the utilities' actions would not merit state action immunity because of the lack of "active state supervision." Ticor, 504 U.S. at 636, 112 S.Ct. at 2178. If however the Commission has allocated Brevard County to Florida Power & Light, then the utilities should be accorded state action immunity and summary judgment is appropriate. Menuel v. City of Atlanta, 25 F.3d 990, 994 (11th Cir.1994).

Whether the particular anticompetitive conduct was approved by the State turns on two factual inquiries. The first concerns events surrounding the Commission's approval of the territorial agreements that resulted in Order No. 3799 in 1965. The second relates to the parties' actions since the 1965 order which culminated in the Commission's 1989 declaratory statement interpreting that order.

In its 1965 Order, the Commission expressly approved several...