Tom Hudson & Associates, Inc. v. City of Chula Vista

• Decision Date: 05 November 1984
• Docket Number: No. 83-6467,83-6467
• Citation: 746 F.2d 1370
• Parties: 1984-2 Trade Cases 66,251 TOM HUDSON & ASSOCIATES, INC., and Tom Hudson, Plaintiffs-Appellees, v. CITY OF CHULA VISTA, SCA Services Inc., and Chula Vista Sanitary Service, Inc., Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1370

746 F.2d 1370

1984-2 Trade Cases 66,251

TOM HUDSON & ASSOCIATES, INC., and Tom Hudson, Plaintiffs-Appellees, v. CITY OF CHULA VISTA, SCA Services Inc., and Chula Vista

Sanitary Service, Inc., Defendants-Appellants.

No. 83-6467.

United States Court of Appeals, Ninth Circuit.

Submitted May 15, 1984.

Decided Oct. 25, 1984.

As Amended Nov. 5, 1984.

Robert C. Fellmeth, Hallen D. Rosner, San Diego, Cal., for plaintiffs-appellees.

Thomas J. Harron, Chula Vista, Cal., Patrick Lynch, Thomas Gibbs, O'Melveny & Myers, Los Angeles, Cal., for defendants-appellants.

Timothy H.B. Yaryan, Sacramento, Cal., amicus curiae for Greater Los Angeles Solid Wastes Management Assoc.

Richard K. Turner, Turner & Sullivan, Sacramento, Cal., Z. Harry Astor, Orange, Cal., amicus curiae for Cal. Refuse Removal Council Northern California.

Robert J. Logan, City Atty., San Jose, Cal., amicus curiae for the City of San Jose.

Appeal from the United States District Court for the Southern District of California.

Before ANDERSON, SKOPIL, and POOLE, Circuit Judges.

POOLE, Circuit Judge:

This case presents the issue whether California cities are exempt from federal antitrust scrutiny when granting exclusive trash collection franchises.

I.

Plaintiffs-appellees are two trash removal companies, Hudson & Associates and G.B. Services, and their individual owners. Defendants-appellants are the City of Chula Vista, California, and Chula Vista Sanitary Services (CVSS), a competing private trash collection firm, which since 1971 has held a contract with the city of Chula Vista to provide all commercial and residential trash collection services within the city limits. This exclusive trash-collection franchise is protected by city ordinance. Chula Vista Municipal Code Sec. 8.24060.

Beginning in late 1981, plaintiffs wrote to officials of Chula Vista seeking to compete for contracts to provide trash collection in that city. They received no answer.

Instead, in July, 1982, Chula Vista renewed its exclusive trash collection contract with CVSS for five years. The renewal was made without competitive bidding. In December, 1982, plaintiffs filed the present action, alleging that the exclusive franchise granted to CVSS violates both federal and state antitrust laws. On cross-motions for summary judgment and partial summary judgment, the district court held that the city's actions did not constitute protected state action under Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and granted partial summary judgment to plaintiffs. Because the applicability of the state action exemption to the city is a separable and dispositive issue, this court granted permission for interlocutory appeal. 28 U.S.C. Sec. 1292(b). We reverse.

II.

The effect of federal antitrust laws on local and municipal governments has been of growing concern in light of two relatively recent decisions of the U.S. Supreme Court. Lafayette v. Louisiana Power & Light Company, 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978); Community Communications Co., Inc. v. Boulder, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982).

In Parker v. Brown, 317 U.S. 341, 352, 63 S.Ct. 307, 314, 87 L.Ed. 315 (1943), the Court held that Congress did not intend federal antitrust laws to apply to the acts of States "as sovereigns." More than thirty years later, however, the Lafayette and Boulder decisions limited the Parker state-action doctrine and declared that municipalities, "simply by their status as such," do not share the State's antitrust immunity. In Lafayette, the Court held that a city could be sued for alleged antitrust violations committed by its wholly-owned municipal power company. The plurality of the Court in Lafayette stated that such municipal conduct is unprotected by Parker v. Brown unless the city acts "pursuant to [a] state policy to displace competition with regulation or monopoly public service." 435 U.S. at 413, 98 S.Ct. at 1136. Adopting language from cases that had applied Parker v. Brown to actions of state agencies, see Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977), the plurality stated that cities and other local governmental entities would be protected by the state's antitrust immunity so long as their conduct was authorized by a "clearly articulated and affirmatively expressed * * * state policy." 435 U.S. at 410, 98 S.Ct. at 1135.

In Boulder, a majority of the Court adopted the position of the Lafayette plurality: that the municipal acts are exempt from federal antitrust standards only when they are done pursuant to a "clearly articulated and affirmatively expressed" state policy. 455 U.S. at 51, 102 S.Ct. at 840. The Court rejected the City's contention that, as a home rule city under the Colorado constitution with "full right of self-government in both local and municipal affairs," its own regulation of local cable television suppliers was the equivalent to that of the state. 455 U.S. at 53, 102 S.Ct. at 841. Far from demonstrating a clearly articulated and affirmatively expressed state policy, the Court explained, the home rule provision showed only a "position * * * of mere neutrality respecting the municipal actions challenged as anticompetitive." 455 U.S. at 55, 102 S.Ct. at 842. "Acceptance of such a proposition--that the general grant of power to enact ordinances necessarily implies state authorization to enact specific anticompetitive ordinances--would wholly eviscerate the concepts of 'clear articulation and affirmative expression' that our precedents require." 455 U.S. at 56, 102 S.Ct. at 843.

The foregoing cases, however, did not hold that the challenged municipal conduct need be inescapably mandated by the State. See Turf Paradise Inc. v. Arizona Downs, 670 F.2d 813, 823 n. 8 (9th Cir.1982). Though neutrality is not enough, something less than strict compulsion is necessary to extend immunity to local government. Rather, to determine that Parker v. Brown immunity applies, a court need only find that, "from the authority given a governmental entity to operate in a particular given area, that the legislature contemplated the kind of action complained of." Lafayette, 435 U.S. at 415, 98 S.Ct. at 1138 (opinion of Brennan, J.). See also Boulder, 455 U.S. at 55, 102 S.Ct. at 842.

Boulder explicitly left open the issue whether a municipality must also show that its actions were "actively supervised by the State," as had been suggested by the plurality opinion in Lafayette. Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135; Boulder, 455 U.S. at 51, n. 14, 102 S.Ct. at 841, n. 14. Though the Supreme Court has not addressed this question, this court and several other circuits have held that the requirement of "active state supervision" applies only to private persons seeking protection under the Parker v. Brown doctrine. See, e.g., California Liquor Dealers v. Midcal Aluminum, 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233 (1980). Municipalities, however, need make no showing of supervision by the State in suits challenging "traditional municipal functions." Golden State Transit Corp. v. City of Los Angeles, 726 F.2d 1430, 1434 (9th Cir.1984); Town of Hallie v. City of Eau Claire, 700 F.2d 376, 383-84 (7th Cir.1983) cert. granted, --- U.S. ----, 104 S.Ct. 3508, 82 L.Ed.2d 818 (1984); Gold Cross Ambulance & Tran. v. City of Kansas City, 705 F.2d 1005, 1014 (8th Cir.1983).

Thus, to qualify for Parker v. Brown immunity, a city need only show that it is acting pursuant to a clearly articulated and affirmatively expressed state policy to displace competition, and that the legislature contemplated that that policy might be implemented by the kind of actions challenged as anticompetitive. Golden State Transit Corp. v. City of Los Angeles, 726 F.2d 1430, 1433 (9th Cir.1984) (Los Angeles taxicab regulation found to be supported by "clearly articulated and affirmatively expressed state policy").

III.

The present case poses no close questions of legislative intent. The State of California has plainly established a "clearly articulated and affirmatively expressed" policy that supports Chula Vista's grant of an exclusive trash hauling contract to CVSS. In particular, section 66757 of the California Government Code explicitly authorizes the very actions taken by Chula Vista. It states:

Notwithstanding any other provisions of law, each * * * city * * * may determine * * * (b) whether [solid waste handling] services are to be provided by means of non-exclusive franchise, contract, license, permit, or otherwise, either with or without competitive bidding, or, if in the opinion of its governing body, the public health, safety, and well-being so require, by partially or wholly exclusive franchise, contract, license, permit, or otherwise either with or without competitive bidding. (emphasis added).

The California Legislature unquestionably "contemplated" the measures adopted by Chula Vista.

Despite this statute's specificity, appellants seek to analogize it to the broad home rule provision at issue in Boulder. Appellees argue that Sec. 66757 falls short of the standards required by Lafayette and Boulder because it fails to describe the particular regulatory procedure that municipalities must adopt if they choose to displace competition in the trash removal market. Because of this failure, appellees c...