Source: http://www.law.cornell.edu/supremecourt/text/499/365
Timestamp: 2013-12-09 10:59:42
Document Index: 212735794

Matched Legal Cases: ['§ 1', '§ 1', '§ 39', '§ 1', '§ 2', '§ 5']

CITY OF COLUMBIA and Columbia Outdoor Advertising, Inc., Petitioners, v. OMNI OUTDOOR ADVERTISING, INC. | Supreme Court | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews CITY OF COLUMBIA and Columbia Outdoor Advertising, Inc., Petitioners, v. OMNI OUTDOOR ADVERTISING, INC.
499 U.S. 365 (111 S.Ct. 1344, 113 L.Ed.2d 382)
[HTML] dissent, STEVENS, WHITE, MARSHALL
[HTML] Syllabus After respondent Omni Outdoor Advertising, Inc., entered the billboard market in petitioner Columbia, South Carolina, petitioner Columbia Outdoor Advertising, Inc. (COA), which controlled more than 95% of the market and enjoyed close relations with city officials, lobbied these officials to enact zoning ordinances restricting billboard construction. After such ordinances were passed, Omni filed suit against petitioners under §§ 1 and 2 of the Sherman Act and the State's Unfair Trade Practices Act, alleging, inter alia, that the ordinances were the result of an anticompetitive conspiracy that stripped petitioners of any immunity to which they might otherwise be entitled. After Omni obtained a jury verdict on all counts, the District Court granted petitioners' motions for judgment notwithstanding the verdict on the ground that their activities were outside the scope of the federal antitrust laws. The Court of Appeals reversed and reinstated the verdict.
Held: 1. The city's restriction of billboard construction is immune from federal antitrust liability under Parker v. Brown, 317 U.S. 341, 352, 63 S.Ct. 307, 314, 87 L.Ed. 315which held that principles of federalism and state sovereignty render the Sherman Act inapplicable to anticompetitive restraints imposed by the States "as an act of government"and subsequent decisions according Parker immunity to municipal restriction of competition in implementation of state policy, see, e.g., Hallie v. Eau Claire, 471 U.S. 34, 38, 105 S.Ct. 1713, 1716, 85 L.Ed.2d 24. Pp. 370-379.
2. COA is immune from liability for its activities relating to enactment of the ordinances under Eastern Railroad Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 141, 81 S.Ct. 523, 531, 5 L.Ed.2d 464, which states a corollary to Parker: The federal antitrust laws do not regulate the conduct of private individuals in seeking anticompetitive action from the government. The Court of Appeals erred in applying the "sham" exception to the Noerr doctrine. This exception encompasses situations in which persons use the governmental process itselfas opposed to the outcome of that processas an anticompetitive weapon. That is not the situation here. California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 512, 92 S.Ct. 609, 612, 30 L.Ed.2d 642, distinguished. Omni's suggestion that this Court adopt a "conspiracy" exception to Noerr immunity is rejected for largely the same reasons that prompt the Court to reject such an exception to Parker. Pp. 379-384.
* Petitioner Columbia Outdoor Advertising, Inc. (COA), a South Carolina corporation, entered the billboard business in the city of Columbia, South Carolina (also a petitioner here), in the 1940's. By 1981 it controlled more than 95% of what has been conceded to be the relevant market. COA was a local business owned by a family with deep roots in the community, and enjoyed close relations with the city's political leaders. The mayor and other members of the city council were personal friends of COA's majority owner, and the company and its officers occasionally contributed funds and free billboard space to their campaigns. According to respondent Omni Outdoor Advertising, Inc., these beneficences were part of a "longstanding" "secret anticompetitive agreement" whereby "the City and COA would each use their sic respective power and resources to protect . . . COA's monopoly position," in return for which "City Council members received advantages made possible by COA's monopoly." Brief for Respondent 12, 16.
In 1981, Omni, a Georgia corporation, began erecting billboards in and around the city. COA responded to this competition in several ways. First, it redoubled its own billboard construction efforts and modernized its existing stock. Secondaccording to Omniit took a number of anticompetitive private actions, such as offering artificially low rates, spreading untrue and malicious rumors about Omni, and attempting to induce Omni's customers to break their contracts. Finally (and this is what gives rise to the issue we address today), COA executives met with city officials to seek the enactment of zoning ordinances that would restrict billboard construction. COA was not alone in urging this course; concerned about the city's recent explosion of billboards, a number of citizens including writers of articles and editorials in local newspapers advocated restrictions.
In November 1982, Omni filed suit against COA and the city in Federal District Court, charging that they had violated §§ 1 and 2 of the Sherman Act, 26 Stat. 209, as amended, 15 U.S.C. 1, 2,
as well as South Carolina's Unfair Trade Practices Act, S.C.Code Ann. § 39-5-140 (1976). Omni contended, in particular, that the city's billboard ordinances were the result of an anticompetitive conspiracy between city officials and COA that stripped both parties of any immunity they might otherwise enjoy from the federal antitrust laws. In January 1986, after more than two weeks of trial, a jury returned general verdicts against the city and COA on both the federal and state claims. It awarded damages, before trebling, of $600,000 on the § 1 Sherman Act claim, and $400,000 on the § 2 claim.
The jury also answered two special interrogatories, finding specifically that the city and COA had conspired both to restrain trade and to monopolize the market. Petitioners moved for judgment notwithstanding the verdict, contending among other things that their activities were outside the scope of the federal antitrust laws. In November 1988, the District Court granted the motion.
It is undisputed that, as a matter of state law, these statutes authorize the city to regulate the size, location, and spacing of billboards. It could be argued, however, that a municipality acts beyond its delegated authority, for Parker purposes, whenever the nature of its regulation is substantively or even procedurally defective. On such an analysis it could be contended, for example, that the city's regulation in the present case was not "authorized" by S.C.Code Ann. § 5-23-10 (1976), see n. 3, supra, if it was not, as that statute requires, adopted "for the purpose of promoting health, safety, morals or the general welfare of the community." As scholarly commentary has noted, such an expansive interpretation of the Parker-defense authorization requirement would have unacceptable consequences.
Besides authority to regulate, however, the Parker defense also requires authority to suppress competitionmore specifically, "clear articulation of a state policy to authorize anticompetitive conduct" by the municipality in connection with its regulation. Hallie, 471 U.S., at 40, 105 S.Ct., at 1717 (internal quotation omitted). We have rejected the contention that this requirement can be met only if the delegating statute explicitly permits the displacement of competition, see id., at 41-42, 105 S.Ct., at 1717-1718. It is enough, we have held, if suppression of competition is the "foreseeable result" of what the statute authorizes, id., at 42, 105 S.Ct., at 1718. That condition is amply met here. The very purpose of zoning regulation is to displace unfettered business freedom in a manner that regularly has the effect of preventing normal acts of competition, particularly on the part of new entrants. A municipal ordinance restricting the size, location, and spacing of billboards (surely a common form of zoning) necessarily protects existing billboards against some competition from newcomers.
The Court of Appeals was therefore correct in its conclusion that the city's restriction of billboard construction was prima facie entitled to Parker immunity. The Court of Appeals upheld the jury verdict, however, by invoking a "conspiracy" exception to Parker that has been recognized by several Courts of Appeals. See, e.g., Whitworth v. Perkins, 559 F.2d 378 (CA5 1977), vacated, 435 U.S. 992, 98 S.Ct. 1642, 56 L.Ed.2d 81, aff'd on rehearing, 576 F.2d 696 (1978), cert. denied, 440 U.S. 911, 99 S.Ct. 1224, 59 L.Ed.2d 460 (1979). That exception is thought to be supported by two of our statements in Parker: "We have no question of the state or its municipality becoming a participant in a private agreement or combination by others for restraint of trade, cf. Union Pacific R. Co. v. United States, 313 U.S. 450 61 S.Ct. 1064, 85 L.Ed. 1453." Parker, 317 U.S., at 351-352, 63 S.Ct., at 314 (emphasis added). "The state in adopting and enforcing the prorate program made no contract or agreement and entered into no conspiracy in restraint of trade or to establish monopoly but, as sovereign, imposed the restraint as an act of government which the Sherman Act did not undertake to prohibit." Id., at 352, 63 S.Ct., at 314 (emphasis added). Parker does not apply, according to the Fourth Circuit, "where politicians or political entities are involved as conspirators" with private actors in the restraint of trade. 891 F.2d, at 1134.
There is no such conspiracy exception. The rationale of Parker was that, in light of our national commitment to federalism, the general language of the Sherman Act should not be interpreted to prohibit anticompetitive actions by the States in their governmental capacities as sovereign regulators. The sentences from the opinion quoted above simply clarify that this immunity does not necessarily obtain where the State acts not in a regulatory capacity but as a commercial participant in a given market. That is evident from the citation of Union Pacific R. Co. v. United States, 313 U.S. 450, 61 S.Ct. 1064, 85 L.Ed. 1453 (1941), which held unlawful under the Elkins Act certain rebates and concessions made by Kansas City, Kansas, in its capacity as the owner and operator of a wholesale produce market that was integrated with railroad facilities. These sentences should not be read to suggest the general proposition that even governmental regulatory action may be deemed privateand therefore subject to antitrust liabilitywhen it is taken pursuant to a conspiracy with private parties. The impracticality of such a principle is evident if, for purposes of the exception, "conspiracy" means nothing more than an agreement to impose the regulation in question. Since it is both inevitable and desirable that public officials often agree to do what one or another group of private citizens urges upon them, such an exception would virtually swallow up the Parker rule: All anticompetitive regulation would be vulnerable to a "conspiracy" charge. See Areeda & Hovenkamp, supra, ¶ 203.3b, at 34, and n. 1; Elhauge, The Scope of Antitrust Process, 104 Harv.L.Rev. 667, 704-705 (1991).
Omni suggests, however, that "conspiracy" might be limited to instances of governmental "corruption," defined variously as "abandonment of public responsibilities to private interests," Brief for Respondent 42, "corrupt or bad faith decisions," id., at 44, and "selfish or corrupt motives," ibid. Ultimately, Omni asks us not to define "corruption" at all, but simply to leave that task to the jury: "at bottom, however, it was within the jury's province to determine what constituted corruption of the governmental process in their community." Id., at 43. Omni's amicus eschews this emphasis on "corruption," instead urging us to define the conspiracy exception as encompassing any governmental act "not in the public interest." Brief for Associated Builders and Contractors, Inc., as Amicus Curiae 5.
A conspiracy exception narrowed along such vague lines is similarly impractical. Few governmental actions are immune from the charge that they are "not in the public interest" or in some sense "corrupt." The California marketing scheme at issue in Parker itself, for example, can readily be viewed as the result of a "conspiracy" to put the "private" interest of the State's raisin growers above the "public" interest of the State's consumers. The fact is that virtually all regulation benefits some segments of the society and harms others; and that it is not universally considered contrary to the public good if the net economic loss to the losers exce