No. 17-35640

IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

–––––––––––––––––––––––––––––––––––––––––––––

CHAMBER OF COMMERCE OF THE UNITED 

STATES OF AMERICA and RASIER, LLC,

Plaintiffs-Appellants,

v.

CITY OF SEATTLE; SEATTLE DEPARTMENT OF 

FINANCE AND ADMINISTRATIVE SERVICES; and

FRED PODESTA, in his official capacity,

Defendants-Appellees.

–––––––––––––––––––––––––––––––––––––––––––––

On Appeal from the United States District Court 

for the Western District of Washington

No. 2:17-cv-00370 (Hon. Robert S. Lasnik)

–––––––––––––––––––––––––––––––––––––––––––––

BRIEF FOR THE UNITED STATES AND THE FEDERAL 

TRADE COMMISSION AS AMICI CURIAE IN SUPPORT 

OF APPELLANT AND IN FAVOR OF REVERSAL

–––––––––––––––––––––––––––––––––––––––––––––

MAKAN DELRAHIM

Assistant Attorney General

ANDREW C. FINCH

Principal Deputy Assistant Attorney General

DAVID C. SHONKA

Acting General Counsel

JOEL MARCUS

Deputy General Counsel

ROBERT B. NICHOLSON

STEVEN J. MINTZ

Attorneys

U.S. DEPARTMENT OF JUSTICE

Antitrust Division

950 Pennsylvania Ave., NW

Washington, DC 20530-0001

MICHELE ARINGTON

Assistant General Counsel

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

(202) 326-3157

marington@ftc.gov
i

TABLE OF CONTENTS

TABLE OF AUTHORITIES .................................................................................... ii

STATEMENT OF INTEREST..................................................................................1

QUESTION PRESENTED........................................................................................2

STATEMENT............................................................................................................2

1. The State Action Doctrine and Subordinate State 

Entities................................................................................................2

2. The Seattle Ordinance.........................................................................5

3. This Case.............................................................................................6

ARGUMENT.............................................................................................................8

I. THE STATE OF WASHINGTON DID NOT CLEARLY ARTICULATE AN 

INTENT TO DISPLACE COMPETITION WITH RESPECT TO 

NEGOTIATION OF DRIVER CONTRACTS................................................................8

A. The State Laws Authorizing Regulation of Transportation 

Services Do Not Show a State Policy to Displace 

Competition for Negotiating Driver Contracts...........................................9

B. The Authority to Ensure “Safe and Reliable” Transportation 

Service Cannot Be Read to Clearly Articulate and 

Affirmatively Express a State Intent to Displace 

Competition in Driver Services or Other Input Markets..........................12

C. General State Grants of Antitrust Exemption Do Not Satisfy 

the Clear Articulation Requirement. ........................................................14

II. THE DISTRICT COURT’S ERRONEOUS STATE ACTION ANALYSIS 

HAS POTENTIALLY SERIOUS CONSEQUENCES. ...................................................15

CONCLUSION........................................................................................................17
ii

TABLE OF AUTHORITIES

CASES

California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97 

(1980)........................................................................................................ 4, 11, 15

Cantor v. Detroit Edison Co., 428 U.S. 579 (1976)......................................... 11, 12

City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389 (1978) .................3

Cost Mgmt. Servs., Inc. v. Wash. Nat. Gas Co., 99 F.3d 937 (9th Cir. 1996).........16

FTC v. Phoebe Putney Health Sys., Inc., 568 U.S. 216 (2013)....................... passim

FTC v. Superior Trial Court Lawyers Ass’n, 493 U.S. 411 (1990)...........................8

FTC v. Ticor Title Ins. Co., 504 U.S. 621 (1992)............................. 3, 14, 15, 16, 17

Goldfarb v. Virginia State Bar, 421 U.S. 773 (1975)...............................................5

North Carolina State Bd. of Dental Exam'rs v. FTC, 135 S. Ct. 1101 (2015)..........3

Parker v. Brown, 317 U.S. 341 (1943)............................................................. 1, 2, 3

Shames v. California Travel & Tourism Comm’n, 626 F.3d 1079 

(9th Cir. 2010)........................................................................................................3

Southern Motor Carriers Rate Conference, Inc. v. United States, 471 U.S. 48 

(1985)........................................................................................................ 4, 11, 12

Town of Hallie v. City of Eau Claire, 471 U.S. 34 (1985) ....................... 3, 4, 14, 16

STATUTES

15 U.S.C. § 1..........................................................................................................2, 7

Wash. Rev. Code § 46.72.001............................................................... 6, 8, 9, 10, 14

Wash. Rev. Code § 46.72.160........................................................... 5, 7, 8, 9, 10, 13

Wash. Rev. Code § 81.72.200..................................................................... 6, 8, 9, 10

Wash. Rev. Code § 81.72.210......................................................................... 6, 8, 10
iii

RULES AND REGULATIONS

Fed. R. App. P. 29(a) .................................................................................................1

Seattle, Wash. Ordinance 124968..............................................................................6
1

STATEMENT OF INTEREST

The United States and the Federal Trade Commission both enforce the 

federal antitrust laws and have a strong interest in proper application of the “state 

action” doctrine of Parker v. Brown, 317 U.S. 341 (1943), that is central to this 

case. Under the state action doctrine, a state must clearly articulate its intention to

displace competition in a particular field with a regulatory structure. The Supreme 

Court has carefully cabined that antitrust exemption because it sacrifices the 

important benefits that antitrust laws provide consumers and undermines the 

national policy favoring robust competition. 

We file this brief under Federal Rule of Appellate Procedure 29(a) and urge 

the Court to reject application of the state action doctrine to this case. A 

municipality may displace competition under the state’s antitrust exemption only if 

that anticompetitive restraint is the inherent, logical, or ordinary result of the 

exercise of authority delegated by the state. That standard is not satisfied in this 

case. The State of Washington’s delegation of authority to regulate the for-hire 

transportation market does not imply authority to displace competition among 

drivers for their services provided to transport companies. The district court’s 

expansive interpretation of the Washington code provisions plainly violates the 

strict bounds of the state action defense. We express no view on any other issue in 

this case beyond the proper application of the state action doctrine. In particular, 
2

we take no position on whether or not the drivers covered by the challenged 

statutes are employees or independent contractors or how federal labor law may 

apply to this matter. 

QUESTION PRESENTED

Antitrust law forbids independent contractors from collectively negotiating

the terms of their engagement. For example, jointly setting fees is price fixing, 

which is at the very core of the harms the antitrust laws seek to address. An 

ordinance of the City of Seattle nevertheless allows independent drivers for taxi

companies and car services like Uber and Lyft to bargain collectively. The City 

claims exemption from Sherman Act liability under the state action doctrine.

The question presented is whether the State of Washington clearly and 

affirmatively expressed a legislative decision to allow Seattle to displace 

competition, and authorize what otherwise would be per se violations of the 

Sherman Act, in the for-hire driver service market.

STATEMENT

1. The State Action Doctrine and Subordinate State Entities

In Parker v. Brown, 317 U.S. 341 (1943), the Supreme Court held that the

Sherman Act, 15 U.S.C. § 1, which bars “restraints of trade,” should not be read to 

bar states from imposing market restraints “as an act of government.” Id. at 350, 

352. The Court explained that “nothing in the language of the Sherman Act or in 

its history” suggested that Congress intended to restrict the sovereign states from
3

regulating their economies. Id. at 350. Thus, states may, within certain limits, 

adopt and implement policies that would otherwise violate the Sherman Act. 

Application of the state action defense, however, is “disfavored,” and the doctrine 

must be applied narrowly. FTC v. Ticor Title Ins. Co., 504 U.S. 621, 636 (1992). 

That is because “[t]he preservation of the free market and of a system of free 

enterprise” is a “national policy of * * * a pervasive and fundamental character 

* * *.” Id. at 632; accord FTC v. Phoebe Putney Health Sys., Inc., 568 U.S. 216, 

225 (2013); North Carolina State Bd. of Dental Exam’rs v. FTC, 135 S. Ct. 1101, 

1110 (2015); Shames v. California Travel & Tourism Comm’n, 626 F.3d 1079, 

1084 (9th Cir. 2010).

Unlike states, subordinate state entities such as cities or municipalities “are 

not beyond the reach of the antitrust laws by virtue of their status because they are 

not themselves sovereign.” Town of Hallie v. City of Eau Claire, 471 U.S. 34, 38 

(1985). Instead, the acts of substate entities come within the state’s own 

sovereignty only when they “demonstrate that their anticompetitive activities were 

authorized by the state ‘pursuant to state policy to displace competition with 

regulation or monopoly public service.’” Id. at 38-39 (quoting City of Lafayette v. 

Louisiana Power & Light Co., 435 U.S. 389, 413 (1978)).

To ensure that the state truly intends to displace the national policy of freemarket competition, the state’s intent to displace competition must be “clearly 
4

articulated and affirmatively expressed.” California Retail Liquor Dealers Ass’n v.

Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980); see Phoebe Putney, 568 U.S. at

225.

1 A state legislature need not “explicitly authorize specific anticompetitive 

effects” of a municipality’s or city’s actions, but such effects must be “the inherent, 

logical, or ordinary result of the exercise of authority delegated by the state 

legislature.” Phoebe Putney, 568 U.S. at 229. “[T]he State must have foreseen and 

implicitly endorsed the anticompetitive effects as consistent with its policy goals.” 

Id. 

To ensure further that the state action doctrine does not unduly interfere with 

federal antitrust policy, the doctrine applies only to conduct “in [the] particular 

field” where the state has articulated its intent to displace competition. Southern 

Motor Carriers Rate Conference, Inc. v. United States, 471 U.S. 48, 64 (1985). In 

Phoebe Putney, for example, the Court held that Georgia’s regulation of entry into 

the hospital services market through a certificate-of-need requirement did not 

clearly articulate a policy favoring the consolidation of hospitals already in the 

market. As the Court explained, 

 1 Additionally, private actors claiming a state action defense must show that the 

policy is “actively supervised by the State itself.” Midcal, 445 U.S. at 105 (internal 

quotation marks omitted). The “active supervision” requirement does not apply to 

the conduct of municipalities. Hallie, 471 U.S. at 46-47. Because we conclude that 

the Seattle Ordinance fails to meet the clear articulation requirement, we express 

no view on whether the supervision of private conduct contemplated by the 

Ordinance satisfies the active supervision prong of the state action test.
5

regulation of an industry, and even the authorization of discrete forms 

of anticompetitive conduct pursuant to a regulatory structure, does not 

establish that the State has affirmatively contemplated other forms of 

anticompetitive conduct that are only tangentially related.

Phoebe Putney, 568 U.S. at 235. Anticompetitive consolidation of the hospital 

market remained subject to the antitrust laws because it was not the “inherent, 

logical, or ordinary result” of regulating the entry of new hospitals into the market.

Id. at 229. See also Goldfarb v. Virginia State Bar, 421 U.S. 773, 788-92 (1975)

(state action defense did not apply to price-fixing by lawyers despite the State’s 

extensive regulation of the practice of law, where the State did not intend to 

displace price competition for legal services).

2. The Seattle Ordinance

Chapter 46.72 of the Revised Code of Washington (entitled “Transportation 

of Passengers in For Hire Vehicles”) authorizes municipalities to “license, control, 

and regulate all for hire vehicles operating within their respective jurisdictions.” 

Wash. Rev. Code § 46.72.160. Specifically, this authority includes (1) 

“[r]egulating entry”; (2) “[r]equiring a license”; (3) “[c]ontrolling the rates 

charged” for the transportation service; (4) “[r]egulating the routes”; (5)

“[e]stablishing safety and equipment requirements”; and (6) “[a]ny other 

requirements adopted to ensure safe and reliable for hire vehicle transportation 

service.” Id. A related provision states the Washington’s legislature’s “intent * * * 

to permit political subdivisions of the State to regulate for hire transportation 
6

services without liability under federal antitrust laws.” Id. § 46.72.001. Chapter 

81.72 (“Taxicab Companies”) contains nearly identical language concerning

taxicab transportation services. See id. §§ 81.72.200; 81.72.210.

Relying on this authority, the City of Seattle enacted the Ordinance now 

before the Court. It permits for-hire drivers to negotiate collectively their 

contractual relationships with “driver coordinators”—taxicab associations and 

transportations network companies such as Uber and Lyft that hire or contract with 

drivers. Under the Ordinance, drivers may act in concert to bargain over the terms 

of their contracts, including “the nature and amount of payments to be made by, or 

withheld from, the driver coordinator to or by the drivers.” Ordinance 124968

§ 3(H)(1). The Ordinance applies only to drivers who are independent contractors. 

Id. § 3(D). In enacting the Ordinance, the City made findings that allowing drivers 

to negotiate collectively their contracts—ordinarily plainly unlawful conduct—

“will enable more stable working conditions and better ensure that drivers can 

perform their services in a safe, reliable, stable, cost-effective, and economically 

viable manner * * *.” Id. § 1(I). 

3. This Case

The Chamber of Commerce sued the City, alleging, among other things, that 

collective bargaining by independent competing drivers would be price fixing, and 
7

the Ordinance thus violates and is preempted by Section 1 of the Sherman Act, 15 

U.S.C. § 1. Am. Compl. ¶¶ 58-72 (ER 68-71).

2

In the order on review, the district court dismissed the Sherman Act claim on 

the ground that the City’s authorization of collective bargaining among for-hire 

drivers is exempt from the federal antitrust laws under the state action doctrine.

The court held that the City “satisfie[d] the ‘clearly articulated and affirmatively 

expressed’ requirement for state immunity,” because the State had “clearly 

delegate[d] authority for regulating the for-hire transportation industry to local 

government units,” and “‘affirmatively contemplated’ that municipalities would 

displace competition in the for-hire transportation market.” Op. 8 (quoting Phoebe 

Putney, 568 U.S. at 226) (ER 8).

3 The court found that the municipal regulation 

fell within Section 46.72.160’s authorization of “[a]ny other requirements adopted 

to ensure safe and reliable for hire transportation service.” Op. 10 (ER 10). 

Although the court recognized that the City’s use of this provision to implement 

collective bargaining by drivers was “novel,” it found the State’s general

“authorization of anticompetitive regulations” sufficient to meet the state action

test. Op. 9 (ER 9).

 2 “ER” refers to Appellants’ Excerpts of Record.

3 The district court found that companies like Uber and Lyft are “privately 

operated for hire transportation services” within the scope of Chapter 46.72. 

Op. 11-12 (ER 11-12). We express no view on that issue but assume, for purposes 

of argument, that the district was correct on that point.
8

ARGUMENT

I. THE STATE OF WASHINGTON DID NOT CLEARLY ARTICULATE AN 

INTENT TO DISPLACE COMPETITION WITH RESPECT TO 

NEGOTIATION OF DRIVER CONTRACTS.

Unless the state action exemption applies to the Seattle Ordinance, the joint 

negotiation permitted by the Ordinance would be a per se violation of the Sherman 

Act. Independent contractors, as horizontal competitors, may not collude to set the 

price for their services. See FTC v. Superior Trial Court Lawyers Ass’n, 493 U.S. 

411, 422-23 (1990). The critical question here is whether the challenged ordinance 

was “undertaken pursuant to a regulatory scheme that is the State’s own.” Phoebe 

Putney, 568 U.S. at 225 (internal quotation marks omitted). Absent clear evidence 

that Seattle’s sanctioning of anticompetitive restraint of the driver service market

reflects the State’s deliberate and intended policy choice, the City’s action does not 

constitute state action exempt from the Sherman Act.

In accepting the City’s state action defense, the district court: (1) failed to 

require that the City’s restraint on competition be a foreseeable consequence—“the

inherent, logical, or ordinary result”—of the State’s general grant of authority to 

regulate “for hire vehicles” and “for hire vehicle [and taxicab] transportation 

services,” Wash. Rev. Code §§ 46.72.001; 46.72.160; 81.72.200; 81.72.210;

(2) interpreted the state legislative language “to ensure safe and reliable for hire 

vehicle transportation service” so loosely as to nullify limits on the state action 
9

defense; and (3) contrary to established precedent, read a general antitrust 

exemption clause to negate the requirement that a state must clearly articulate and 

affirmatively express state policy to displace competition in a particular field. In 

sum, the immunizing provisions of Sections 46.72.001 and 81.72.200 do not show 

a deliberate State policy to displace competition among providers of driver services

to taxi companies and car services. Reading them that way also would have 

significant adverse consequences by placing clearly anticompetitive conduct out of 

reach of the antitrust laws, potentially undercutting state policy as well as federal 

law.

A. The State Laws Authorizing Regulation of Transportation 

Services Do Not Show a State Policy to Displace Competition

for Negotiating Driver Contracts.

The State of Washington’s for-hire transportation laws do not clearly show 

that the State intended to displace competition in the driver services market. State 

law permits municipalities to regulate transportation services provided to 

consumers. Wash. Rev. Code §§ 46.72.160 & 81.72.210. The Seattle Ordinance at 

issue here, however, is directed not at competition in the market for provision of 

transportation service to consumers, but at the market for hiring drivers. The State 

statutes cannot be read to imply a policy to exempt from the Sherman Act 

contractual negotiations between drivers and companies. 
10

A careful review of the statutory language makes clear that the legislation 

addresses the provision of service by transportation entities to consumers. 

Specifically, the Washington legislature made statutory findings that 

“transportation service” is an important state interest and that the government 

should regulate the “safety, reliability, and stability” of such services. Wash. Rev. 

Code §§ 46.72.001 & 81.72.200. Those statutes focus on the consumer market for 

transportation services, as consumers are the only users of that service. 

The separately enumerated list of conferred regulatory powers further 

bolsters the conclusion that the State legislature focused on the provision of service 

to customers, not drivers’ relationships with companies. The statute states that the 

conferred “power to regulate includes” market entry, licensing, rates, routes, 

safety, and a catch-all provision for other requirements concerning safety and 

reliability. Id. §§ 46.72.160(1)-(6); 81.72.210(1)-(6). Every item on the list—level 

of supply, price, safety, reliability—pertains to the terms of provision of service to 

customers; nothing addresses the conduct of drivers negotiating pay. The only 

reference to pricing relates to controlling the rates charged to consumers and the 

manner in which the rates are calculated and collected, matters that relate solely to 

provision of service to customers. Id. § 46.72.160(3).

It is implausible to read the Washington statute as intended to displace 

competition in the market for driver services. Regulating the negotiation of wages 
11

or other contractual terms between drivers and transportation companies is not an 

“inherent, logical, or ordinary result” of the bundle of regulatory powers the State 

has conferred on municipalities. Phoebe Putney, 568 U.S. at 229. Put differently, 

the statutes do not “clearly articulate[] and affirmatively express[]” the State’s 

intent that local governments allow anticompetitive conduct in the market for 

hiring or contracting with drivers. Midcal, 445 U.S. at 105. Although it authorized 

displacement of competition in the provision of transportation service, the State 

has not acted “in [the] particular field” at issue here. Southern Motor Carriers, 471 

U.S. at 64. The State did not “affirmatively contemplate * * * anticompetitive 

conduct” in the market for driver services, which is distinct from the consumer 

service market. Phoebe Putney, 568 U.S. at 235.

In that respect, this case is similar to Cantor v. Detroit Edison Co., 428 U.S. 

579 (1976), where the Supreme Court held that a state utility commission that had 

authority to regulate electricity rates did not also have the authority to confer 

antitrust exemption for a utility’s restraint of trade in the light-bulb market. The 

commission’s authorizing statute “contain[ed] no direct reference to light bulbs,” 

and the state legislature had not spoken to the desirability of the utility’s conduct. 

Id. at 584. The Court thus concluded that the utility commission’s approval of 

anticompetitive conduct did not “implement any statewide policy relating to light 

bulbs”; at most, “the State’s policy [was] neutral on the question whether a utility 
12

should, or should not, have such a program.” Id. at 585. So too here, the State 

statutes say nothing about bargaining over wages paid to drivers; it is impossible to 

divine a legislative intent to displace competition in that market even though the 

State legislature clearly did displace competition in a different market.

The district court mistakenly relied on Southern Motor Carriers in support 

of its decision. Op. 9-10 (ER 9-10). There, the Supreme Court considered whether 

a Mississippi agency authorized by state law to set common-carrier trucking rates 

could lawfully allow private truckers to engage in collective ratemaking as the 

method for establishing those rates. 471 U.S. at 63-66. The Court concluded that, 

although the statute did not expressly authorize collective ratemaking, the grant of 

authority to set rates “articulated clearly [the State’s] intent to displace price 

competition among common carriers with a regulatory structure.” Id. at 65. 

Southern Motor Carriers has no relevance here because, while the Washington 

State statutes grant municipalities authority to regulate rates and conditions for 

services provided to consumers, nothing in the statutes addresses the setting of 

prices by drivers for their services provided to companies.

B. The Authority to Ensure “Safe and Reliable” Transportation 

Service Cannot Be Read to Clearly Articulate and 

Affirmatively Express a State Intent to Displace Competition 

in Driver Services or Other Input Markets.

In finding clear articulation, the district court focused on the statute’s 

language authorizing municipal regulation “to ensure safe and reliable for hire 
13

vehicle transportation service.” Op. 10 (citing Wash. Rev. Code § 46.72.160(6))

(ER 10). It held that the Ordinance fell within the scope of that delegated authority, 

citing the City’s finding that allowing drivers to negotiate contracts collectively 

would promote safety and reliability. Id. From that finding of delegated authority, 

the court then made the leap to find that the delegation of authority automatically 

satisfied the clear articulation requirement. It concluded that “[o]nce the Court 

concludes that the challenged conduct falls within the clearly articulated and 

affirmatively expressed state policy to displace competition in a particular field, no 

more is needed to satisfy the first prong of the Midcal test.” Op. 11 (ER 11).

The district court thus conflated the question of whether the City 

“possess[ed] the delegated authority to act,” Op. 10 (ER 10), with the clear 

articulation inquiry. As the Supreme Court has explained, however, “state-law 

authority to act is insufficient to establish state-action immunity; the substate 

governmental entity must also show that it has been delegated authority to act or 

regulate anticompetitively.” Phoebe Putney, 568 U.S. at 228 (emphasis added).

The delegation of authority to regulate for “safety and reliability” does not 

demonstrate that the Washington legislature anticipated and authorized the 

achievement of those goals through such indirect means as suppressing 

competition among drivers in their contract negotiations. The district court’s

expansive interpretation of the “safe and reliable” authorizing language cannot be 
14

squared with the strict limits the Supreme Court has placed on the state action 

defense. See supra 2-5.

Taken to its logical conclusion, moreover, the district court’s reading of the 

statute’s “safe and reliable” authorizing language could cover nearly any type of 

anticompetitive restriction. For example, the City of Seattle could allow tire 

manufacturers (who, like drivers, also provide an input to taxi service) to collude to 

set prices charged to taxi operators on the ground that ensuring good tire quality is 

important to the safety of passengers. Or it could allow auto mechanics to collude 

on the prices they charge for their services on the ground that ensuring high-quality 

mechanical service promotes passenger safety. The State surely did not intend to 

allow such absurd results, yet they would flow from the district court’s reasoning.

C. General State Grants of Antitrust Exemption Do Not Satisfy 

the Clear Articulation Requirement.

The district court found that a statutory provision stating the legislature’s

intent “to permit political subdivisions of the state to regulate for hire 

transportation services without liability under federal antitrust laws,” Op. 7-8 

(citing Wash. Rev. Code § 46.72.001) (ER 7-8), provided blanket antitrust 

protection. That conclusion is at odds with the established state-action principle

that “the State may not validate a municipality’s anticompetitive conduct simply by 

declaring it to be lawful.” Hallie, 471 U.S. at 39 (citing Parker, 317 U.S. at 351); 

see Ticor, 504 U.S. at 633 (“[A] State may not confer antitrust immunity on private 
15

persons by fiat.”). In the court’s view, that provision showed that “anti-competitive 

results were not merely foreseeable, they were expressly authorized.” Op. 9 n.5

(ER 9). But as shown above, the State did not expressly authorize anticompetitive 

results in the market for drivers’ compensation; it clearly articulated and 

affirmatively expressed an intent to allow for the municipal regulation only of 

distinct aspects of the provision of transportation services to consumers.

The district court took the State legislature’s narrow grant of antitrust 

exemption for regulation of the provision of service to customers as a broad grant 

of immunity for anything related to for-hire transportation services. That approach 

is antithetical to the long-established rules that the state action defense is 

“disfavored” and must be construed narrowly, Ticor, 504 U.S. at 636, and that 

legislative intent to displace antitrust law in the particular area at issue must be 

“clearly articulated and affirmatively expressed,” Midcal, 445 U.S. at 105. Given 

“our national policy favoring competition,” the State statutes “should be read to 

reflect more modest aims” than total displacement of competition law in any area 

having anything to do with for-hire transport. Phoebe Putney, 568 U.S. at 234.

II. THE DISTRICT COURT’S ERRONEOUS STATE ACTION ANALYSIS HAS 

POTENTIALLY SERIOUS CONSEQUENCES.

Under the district court’s approach, any time a state were to authorize its 

subordinate entities to restrain competition through regulation of particular aspects 

of an industry to ensure safe and reliable service, it would open the antitrust 
16

exemption door for nearly any type of regulation. That outcome is precisely what 

the Supreme Court has warned against, not only because it fails to meet the wellestablished contours of the clear articulation requirement, but also because it would 

effectively put a large swath of plainly anticompetitive conduct out of reach of the 

antitrust laws, seriously undermining the public interest in fostering competition.

Indeed, the district court’s mistaken version of the state action doctrine’s 

clear articulation prong has the potential to undercut state policy as well as federal 

law. See Hallie, 471 U.S. at 47 (noting that the requirement that a municipality act 

pursuant to state policy provides protection against the danger that the municipallydirected enterprise “will seek to further purely parochial public interests at the 

expense of more overriding state goals”). Exempting subordinate entities from the 

Sherman Act absent evidence that a state clearly intended to displace competition 

in that particular sphere of activity interferes with the state’s ability to implement 

its policies. As the Supreme Court observed in rejecting a broad application of the 

state action doctrine in Ticor, 504 U.S. at 635, “[i]f the States must act in the 

shadow of state-action immunity whenever they enter the realm of economic

regulation, then our doctrine will impede their freedom of action, not advance it.” 

See Cost Mgmt. Servs., Inc. v. Wash. Nat. Gas Co., 99 F.3d 937, 941 (9th Cir. 

1996) (less rigorous application of clear articulation requirement “may 
17

inadvertently extend immunity to anticompetitive activity which the states did not 

intend to sanction”).

The Supreme Court has made clear that both “federalism and state 

sovereignty are poorly served by a rule of construction that would allow ‘essential 

national policies’ embodied in the antitrust laws to be displaced by state 

delegations of authority ‘intended to achieve more limited ends.’” Phoebe Putney, 

568 U.S. at 236 (quoting Ticor, 504 U.S. at 636). The district court transgressed 

that principle here, and its ruling should be reversed.

CONCLUSION

The district court’s order dismissing the case on the ground that the conduct 

alleged is exempt from the federal antitrust laws under the state action doctrine 

should be reversed, and the cause should be remanded for further proceedings.
18

Respectfully submitted,

November 3, 2017

MAKAN DELRAHIM

Assistant Attorney General

ANDREW C. FINCH

Principal Deputy Assistant Attorney 

General

ROBERT B. NICHOLSON

STEVEN J. MINTZ

Attorneys

U.S. DEPARTMENT OF JUSTICE

Antitrust Division

950 Pennsylvania Ave., NW

Washington, DC 20530-0001

 

 

/s/ Michele Arington

DAVID C. SHONKA

Acting General Counsel

JOEL MARCUS

Deputy General Counsel

MICHELE ARINGTON

Assistant General Counsel

FEDERAL TRADE COMMISSION

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

(202) 326-3157

marington@ftc.gov
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I hereby certify that this brief complies with the type-volume limitations of 

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exempted by Fed. R. App. P. 32(a)(7)(B)(iii) and the signature block, as prepared 

using the Microsoft Word word-processing system. 

November 3, 2017 /s/ Michele Arington

Assistant General Counsel

CERTIFICATE OF SERVICE

I hereby certify that on November 3, 2017, I electronically filed the foregoing

by using the Court’s CM/ECF system. I certify that all participants in the case are 

registered CM/ECF users, and thus service will be accomplished by the CM/ECF 

system.

November 3, 2017 /s/ Michele Arington 

Assistant General Counsel