It’s been a busy summer at the Circuits for decisions applying the antitrust state action immunity. First up, as we reported three weeks ago, was the Ninth Circuit’s affirmance of the dismissal in Shames v. California Travel and Tourism Commission, [pdf] in which the plaintiffs alleged the California Travel and Tourism Commission had colluded with the rental car industry to pass certain fees to customers. Now, hard on the heels of Shames, we have two more decisions: Danner Construction Co., Inc. v. Hillsborough County Florida [pdf] from the Eleventh Circuit, and Rectrix Aerodrome Centers, Inc. v. Barnstable Municipal Airport Commission [pdf] from the First.
In Danner, the Florida legislature had enacted a statute authorizing Hillsborough County to take “exclusive control” over solid waste disposal within its jurisdiction, and barring anyone other than the county or its franchisees from collecting or disposing of solid waste within the county. Acting under the statute, the county had passed an ordinance providing for awards of franchises for both residential and commercial waste collection. The County Commissioners set collection rates for residential service, but not for commercial service.
A disposal service and a commercial customer sued, arguing that both by restricting the commercial market and by setting below-market rates for residential service, the county’s ordinance essentially authorized price fixing in commercial service.
According to the Eleventh Circuit panel, antitrust claims against state entities are analyzed in two steps. First, the Court asks whether the statute or ordinance is preempted by the antitrust laws. If the answer is yes, the Court then applies the two part test for state action immunity set forth in Midcal to determine whether the challenged conduct is immune from antitrust liability.
The panel majority held that it was unnecessary to decide whether the statute and ordinance were preempted, because even if they were, the county’s conduct was immune under Midcal, since the county’s actions were a foreseeable result of a clearly expressed state policy.
The majority commented in dicta that state statutes can only be preempted when they purport to authorize per se violations of the antitrust laws – appearing to suggest that states can freely authorize rule of reason antitrust violations. The majority’s comment sparked a concurring opinion from Judge Beverly Martin. Judge Martin argued that when a plaintiff brought an “as applied,” rather than a facial challenge to a state action, the statute could be preempted under either per se or rule of reason analysis.
Last week, the First Circuit weighed in, affirming dismissal of antitrust claims in Rectrix. Massachusetts law requires any city or town that establishes an airport to also create an airport commission, which is empowered to lease land, acquire property, set charges and rentals, spend money, and make rules and regulations. Rectrix sued the Barnstable Municipal Airport Commission (BMAC), alleging that the BMAC had prevented it from competing with BMAC in the sale of jet fuel.
It might seem that a statute requiring cities and towns to create airport commissions with administer their airports falls far short of clearly articulating an intention to displace competition, but in fact, a number of Circuits have found state action immunity for similar airport authorities. The First Circuit followed this line of authority, as well as its own earlier decision interpreting the statute creating the Massachusetts Port Authority, Interface Group v. Mass. Port Authority, holding that the statute sufficiently authorized an exclusive dealing arrangement for sales of jet fuel at the airport. Since the plaintiff sued a government entity, rather than a private actor, the Court had no need to apply the second Midcal factor, which asks whether anticompetitive activity is actively supervised by the government.