Source: https://m.openjurist.org/435/us/389
Timestamp: 2020-01-18 15:49:50
Document Index: 468788563

Matched Legal Cases: ['§ 4', '§ 15', '§ 33', '§ 33', '§ 1', '§ 2', '§ 3', '§ 7', '§ 8', '§ 1', '§ 12', '§ 13', '§ 13', '§ 1', '§ 41', '§ 8', '§ 3244', '§ 3140', '§ 16', '§ 815', '§ 1', '§ 801', '§ 33', '§ 33', '§ 33', '§ 1254', '§ 33', '§ 4', '§ 15', '§ 284', '§ 11', '§ 16', '§ 815', '§ 1', '§ 41', '§ 8']

435 U.S. 389 - City of Lafayette Louisiana v. Louisiana Power & Light Company
435 US 389 City of Lafayette Louisiana v. Louisiana Power & Light Company
CITY OF LAFAYETTE, LOUISIANA and City of Plaquemine, Louisiana, Petitioners,
LOUISIANA POWER & LIGHT COMPANY.
I agree with THE CHIEF JUSTICE, post, at 425-426, that any implied "state action" exemption from the antitrust laws should be no broader than is necessary to serve the State's legitimate purposes. I join the plurality opinion, however, because the test there established, relating to whether it is "state policy to displace competition," ante, at 413, incorporates within it the core of THE CHIEF JUSTICE's concern. As the plurality opinion makes clear, it is not enough that the State "desire[s] to insulate anticompetitive practices." Ante, at 416. For there to be an antitrust exemption, the State must "impose" the practices "as an act of government." Ibid. State action involving more anticompetitive restraint than necessary to effectuate governmental purposes must be viewed as inconsistent with the plurality's approach.
This case turns, or ought to, on the District Court's explicit conclusion,1 unchallenged here, that "[t]hese plaintiff cities are engaging in what is clearly a business activity; activity in which a profit is realized." There is nothing in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), or its progeny, which suggests that a proprietary enterprise with the inherent capacity for economically disruptive anticompetitive eff cts should be exempt from the Sherman Act merely because it is organized under state law as a municipality. Parker was a case involving a suit against state officials who were administering a state program which had the conceded purpose of replacing competition in a segment of the agricultural market with a regime of governmental regulation. The instant lawsuit is entirely different. It arises because respondent took the perfectly natural step of answering a federal antitrust complaint— filed by competitors—with a counterclaim alleging serious violations of the Sherman Act.
"As a direct and proximate result of the unlawful conduct hereinabove alleged, plaintiffs have: (1) been prevented from and continue to be prevented from profitably expanding their businesses ; (2) lost and continue to lose the profits which would have resulted from the operation of an expanded, more efficient and lower cost business ; (3) been deprived of and continue to be deprived of economies in the financing and operation of their systems; (4) sustained and continue to sustain losses in the value of their businesses and properties ; and (5) incurred and continue to incur excessive costs and expenses they otherwise would not have incurred." App. 14. (Emphasis added.)
It strikes me as somewhat remarkable to suggest that the same Congress which "meant to deal comprehensively and effectively with the evils resulting from contracts, combinations and conspiracies in restraint of trade," Atlantic Cleaner & Dyers, Inc. v. United States, 286 U.S. 427, 435, 52 S.Ct. 607, 609, 76 L.Ed. 1204 (1932), would have allowed these petitioners to complain of such economic damage while baldly asserting that any similar harms they might unleash upon competitors or the economy are absolutely beyond the purview of federal law. To allow the defense asserted by the petitioners in this case would inject a wholly arbitrary variable into a "fundamental national economic policy." Carnation Co. v. Pacific Conference, 383 U.S. 213, 218, 86 S.Ct. 781, 784, 15 L.Ed.2d 709 (1966), which strongly disfavors immunity from its scope. See United States v. Philadelphia Nat. Bank, 374 U.S. 321, 350-351, 83 S.Ct. 1715, 1734-1735, 10 L.Ed.2d 915 (1963); California v. FPC, 369 U.S. 482, 485, 82 S.Ct. 901, 903, 8 L.Ed.2d 54 (1962).
As I indicated, concurring in Cantor v. Detroit Edison Co., 428 U.S. 579, 604, 96 S.Ct. 3110, 3123, 49 L.Ed.2d 1141 (1976), "in interpreting Parker, the Court has heretofore focused on the challenged activity, not upon the identity of the parti § to the suit." Such an approach is surely logical in light of the fact that the Congress which passed the Sherman Act very likely never considered the kinds of problems generated by Parker and the cases which have arisen in its wake. E. g., Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810 (1977); Cantor, supra; Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975); see Slater, Antitrust and Government Action: A Formula for Narrowing Parker v. Brown, 69 Nw.U.L.Rev. 71, 84 (1974). It is even more dubious to assume that the Congress specifically focused its attention on the possible liability of a utility operated by a subdivision of a State. Not only were the States generally considered free to regulate commerce within their own borders, see, e. g., United States v. E. C. Knight Co., 156 U.S. 1, 15 S.Ct. 249, 39 L.Ed. 325 (1895); Kidd v. Pearson, 128 U.S. 1, 9 S.Ct. 6, 32 L.Ed. 346 (1888), but manufacturing enterprises, in and of themselves, were not taken to be interstate commerce. Id., at 20, 9 S.Ct., at 9.
By the time Parker was decided, however, this narrow view of "interstate commerce" had broadened via the "affection doctrine" to include intrastate events which had a sufficient effect on interstate commerce. See NLRB v. Fainblatt, 306 U.S. 601, 605, and n. 1, 59 S.Ct. 668, 671, 83 L.Ed. 1014 (1939); cf. Hospital Building Co. v. Rex Hospital Trustees, 425 U.S. 738, 743, 96 S.Ct. 1848, 1852, 48 L.Ed.2d 338 (1976). Given this development, and the Court's interpretation of "person" or "persons" in the Sherman Act to include States and municipalities, ante, at 394-397, along with the trend of allowing the reach of the Sherman Act to expand with broadening conceptions of congressional power under the Commerce Clause, see Rex Hospital Trustees, supra, at 743 n. 2, 96 S.Ct., at 1852, one might reasonably wonder how the Court reached its result in Parker.
The holding in Parker is perfectly understandable, though, in light of the historical period in which the case was decided. The Court had then but recently emerged from the era of substantive due process, and was undoubtedly not eager to commence a new round of invalidating state regulatory laws on federal principles. See Verkuil, State Action, Due Process and Antitrust: Reflections on Parker v. Brown, 75 Colum.L.Rev. 328, 331-334 (1975). Responding to this concern, the Parker Court's interpretation of legislative intent reflects a "polic[y] of signal importance in our national traditions and governmental structure of federalism." Ante, at 400.
"In a dual system of government in which, under the Constitution, the states are sovereign, save only as Congress may constitutionally subtract from their authority, an unexpressed purpose to nullify a state's control over its officers and agents is not lightly to be attributed to Congress." Parker, 317 U.S., at 351, 63 S.Ct., at 313.
The Parker decision was thus firmly grounded on principles of federalism, the ambit of its inquiry into congressional purpose being defined by the Court's view of the requirements of "a dual system of government."2
This mode of analysis is as sound today as it was then, and I am surprised that neither the plurality opinion nor the dissents focus their attention on this aspect of Parker. Indeed, it is even more puzzling that so much judicial energy is expended here on deciding a question not presented by the parties or by the facts of this case: that is, to what extent the Sherman Act impinges generally upon the monopoly powers of state and local governments. As I suggested at the outset, the issue here is whether the Sherman Act reaches the proprietary enterprises of municipalities.3
The answer to the question presented ought not to be so difficult. When Parker was decided there was certainly no question that a State's operation of a common carrier, even without profit and as a "public function," would be subject to federal regulation under the Commerce Clause. United States v. California, 297 U.S. 175, 183-186, 56 S.Ct. 421, 423-425, 80 L.Ed. 567 (1936) ("[W]e think it unimportant to say whether the state conducts its railroad in its 'sovereign' or in its 'private' capacity." Id., at 183, 56 S.Ct., at 424); see Parden v. Terminal R. Co., 377 U.S. 184, 189-193, 84 S.Ct. 1207, 1211-1213, 12 L.Ed.2d 233 (1964); California v. Taylor, 353 U.S. 553, 568, 77 S.Ct. 1037, 1045, 1 L.Ed.2d 1034 (1957). Likewise, it had been held in Ohio v. Helvering, 292 U.S. 360, 54 S.Ct. 725, 78 L.Ed. 1307 (1934), that a State, upon engaging in business, became subject to a federal statute imposing a tax on those dealing in intoxicating liquors, although States were not specifically mentioned in the statute. In short, the Court had already recognized, for purposes of federalism, the difference between a State's entrepreneurial personality and a sovereign's decision—as in Parker —to replace competition with regulation.4
I see nothing in the last 35 years to question this conclusion. In fact, the Court's recent decision in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), which rekindled a commitment to tempering the Commerce Clause power with the limits imposed by our structure of government, employs language strikingly similar to the words of Mr. Chief Justice Stone in Parker :
"It is one thing to recognize the authority of Congress to enact laws regulating individual businesses necessarily subject to the dual sovereignty of the government of the Nation and of the State in which they reside. It is quite another to uphold a similar exercise of congressional authority directed, not to private citizens, but to States as States. We have repeatedly recognized that there are attributes of sovereignty attaching to every state government which may not be impaired by Congress, not because Congress may lack an affirmative grant of legislative authority to reach the matter, but because the Constitution prohibits it from exercising the authority in that manner." 426 U.S., at 845, 96 S.Ct., at 2470.
The National League of Cities opinion focused its delineation of the " 'attributes of sovereignty" alluded to above on a determination as to whether the State's interest involved "functions essential to separate and independent existence.' " Ibid., quoting Coyle v. Oklahoma, 221 U.S. 559, 580, 31 S.Ct. 688, 695, 55 L.Ed. 853 (1911). It should be evident, I would think, that the running of a business enterprise is not an integral operation in the area of traditional government functions. See Alfred Dunhill of London, Inc. v. Cuba, 425 U.S. 682, 695-696, 96 S.Ct. 1854, 1861-1862, 48 L.Ed.2d 301 (1976); Bank of United States v. Planters' Bank of Georgia, 9 Wheat. 904, 907, 6 L.Ed. 244 (1824). Indeed, the reaffirmance of the holding in United States v. California, supra, by National League of Cities, supra, 426 U.S., at 854 n. 18, 96 S.Ct., at 2475, strongly supports this understanding. Even if this proposition were not generally true, the particular undertaking at issue here—the supplying of electric service—has not traditionally been the prerogative of the State. Jackson v. Metropolitan Edison Co., 419 U.S. 345, 352-353, 95 S.Ct. 449, 454, 42 L.Ed.2d 477 (1974).5
Following the path outlined above should lead us to a logical destination: Petitioners should be treated, for purposes of applying the federal antitrust laws, in essentially the same manner as respondent. This is not to say, of course, that the conduct in which petitioners allegedly engaged is automatically subject to condemnation under the Sherman Act. As the Court recognized in Cantor v. Detroit Edison Co., 428 U.S., at 592-598, 96 S.Ct., at 3117-3121, state-regulated utilities pose special analytical problems underParker. It may very well be, for example, that a State, acting as sovereign, has imposed a system of governmental control in order "to avoid the consequences of unrestrained competition." Cantor, supra, 428 U.S., at 595, 96 S.Ct., at 3119. This is precisely what occurred in Parker, and there is no question that a utility's action taken pursuant to the command of such an "act of government." Parker, 317 U.S., at 352, 63 S.Ct., at 314, would not be prohibited by the Sherman Act.
I agree with the plurality then, that "[t]he threshold inquiry in determining if an anticompetitive activity is state action of the type the Sherman Act was not meant to proscribe is whether the activity is required by the State acting as sovereign." Goldfarb, 421 U.S., at 790, 95 S.Ct., at 2015. (Emphasis added.) But this is only the first, not the final step of the inqui y, for Cantor recognized that "all economic regulation does not necessarily suppress competition." 428 U.S., at 595, 96 S.Ct., at 3119. "There is no logical inconsistency between requiring such a firm to meet regulatory criteria insofar as it is exercising its natural monopoly powers and also to comply with antitrust standards to the extent that it engages in business activity in competitive areas of the economy." Id., at 596, 96 S.Ct., at 3119.
I would therefore remand, directing the District Court to take an additional step beyond merely determining—as the plurality would—that any area of conflict between the State's regulatory policies and the federal antitrust laws was the result of a "state policy to displace competition with regulation or monopoly public service."6 Ante, at 413. This supplemental inquiry would consist of determining whether the implied exemption from federal law "was necessary in order to make the regulatory Act work, 'and even then only to the minimum extent necessary.' " 428 U.S., at 597, 96 S.Ct., at 3120.7
Mr. Justice STEWART, with whom Mr. Justice WHITE, Mr. Justice BLACKMUN,* and Mr. Justice REHNQUIST join, dissenting.
In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315, a California statute restricted competition among raisin growers in order to keep the price of raisins artificially high. The Court found that California's program did not violate the antitrust laws but was "an act of government which the Sherman Act did not undertake to prohibit." Id., at 352, 63 S.Ct., at 314. Parker v. Brown thus made clear that "where a restraint upon trade or monopolization is the result of valid governmental action, as opposed to private action, no violation of the [Sherman] Act can be made out." Eastern Railroad Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 136, 81 S.Ct. 523, 529, 5 L.Ed.2d 464.
The principle of Parker v. Brown controls this case. The petitioners are governmental bodies, not private persons, and their actions are "act[s] of government" which Parker v. Brown held are not subject to the Sherman Act. But instead of applying the Parker doctrine, the Court today imposes new and unjustifiable limits upon it. According to the plurality, governmental action will henceforth be immune from the antitrust laws1 only when "authorized or directed" by the State "pursuant to state policy to displace competition with regulation or monopoly public service." Ante, at 414, 413. Such a "direction" from the State apparently will exist only when it can be shown " 'from the authority given a governmental entity to operate in a particular area, that the legislature contemplated the kind of action complained of.' " Ante, at 415. By this exclusive focus on a legislative mandate the plurality has effectively limited the governmental action immunity of the Parker case to the acts of a state legislature. This is a sharp and I think unjustifiable departure from our prior cases.
THE CHIEF JUSTICE adopts a different approach, at once broader and narrower than the plurality's. In his view, municipalities are subject to antitrust liability when they engage in "proprietary enterprises," ante, at 422, but apparently retain their antitrust immunity for other types of activity. But a city engaged in proprietary activity is to be treated as if it were a private corporation: that is, it is immune from the antitrust laws only if it shows not merely that its action was " 'required by the State acting as sovereign' " but also that such immunity is " 'necessary in order to make the [State's] regulatory Act work.' " Ante, at 425-426. THE CHIEF JUSTICE's approach seems to me just as mistaken as the plurality's.
* The fundamental error in the opinions of the plurality and THE CHIEF JUSTICE is their failure to recognize the difference between private activities authorized or regulated by government on the one hand, and the actions of government itself on the other.
In determining whether the actions of a political subdivision of a State as well as those of a state legislature are immune from the Sherman Act, we must interpret the provisions of the Act "in the light of its legislative history and of the particular evils at which the legislation was aimed." Apex Hosiery Co. v. Leader, 310 U.S. 469, 489, 60 S.Ct. 982, 990, 84 L.Ed. 1311. Those "particular evils" did not include acts of governmental bodies. Rather, Congress was concerned with attacking concentrations of private economic power unresponsive to public needs, such as "these great trusts, these great corporations, these large moneyed institutions." 21 Cong.Rec. 2562 (1890).2
Recognizing this congressional intent, the Court in Parker v. Brown, held that the antitrust laws apply to private and not governmental action. The program there at issue was in fact established by California's legislature, and not by one of its political subdivisions. But the Court nowhere held that the actions of municipal governments should not equally be immune from the antitrust laws. On the contrary, it expressly equated "the state or its municipality." 317 U.S. at 351, 63 S.Ct., at 313. The Parker opinion repeatedly and carefully3 emphasized that California's program was not the action of "private persons, individual or corporate." Id., at 350, 63 S.Ct., at 313.4 The distinction established in Parker v. Brown was not one between actions of a state legislature and those of other governmental units. Rather, the Court drew the line between private action and governmental action.
There can be no doubt on which side of this line the petitioners' actions fall. "Municipal corporations are instrumentalities of the State for the convenient administration of government within their limits." Louisiana ex rel. Folsom v. Mayor of New Orleans, 109 U.S. 285, 287, 3 S.Ct. 211, 213, 27 L.Ed. 936; cf. Reynolds v. Sims, 377 U.S. 533, 575, 84 S.Ct. 1362, 1388, 12 L.Ed.2d 506.5 They have only such powers as are delegated them by the State of which they are a subdivision, and when they act they exercise the State's sovereign power. Avery v. Midland County, 390 U.S. 474, 480, 88 S.Ct. 1114, 1118, 20 L.Ed.2d 45; Breard v. Alexandria, 341 U.S. 622, 640, 71 S.Ct. 920, 931, 95 L.Ed. 1233. City governments are not unaccountable to the public but are subject to direct popular control through their own electorates and through the state legislature.6 They are thus a far cry from the private accumulations of wealth that the Sherman Act was intended to regulate.
The plurality today advances two reasons for holding nonetheless that the Parker doctrine is inapplicable to municipal governments. First, the plurality notes that municipalities cannot cla m the State's sovereign immunity under the Eleventh Amendment. Ante, at 412. But this is hardly relevant to the question of whether they are within the reach of the Sherman Act. That question must be answered by reference to congressional intent, and not constitutional principles that apply in entirely different situations.7 And if constitutional analogies are to be looked to, a decision much more directly related to this case than those under the Eleventh Amendment isNational League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245. That case, like this one, involved an exercise of Congress' power under the Commerce Clause, and held that States and their political subdivisions must be given equal deference. Id., at 855-856, n. 20, 96 S.Ct., at 2476. The plurality does not advance any basis for its disregard of National League of Cities and its reliance instead on the basically irrelevant body of law under the Eleventh Amendment.
Secondly, the plurality relies on Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572. The Goldfarb case, however, did not overrule Parker v. Brown but rather applied it. Goldfarb concerned a scheme regulating economic competition among private parties, namely, lawyers. The Court held that this "private anticompetitive activity," 421 U.S., at 792, 95 S.Ct., at 2015, could not be sheltered under the umbrella of the Parker doctrine unless it was compelled by the State. Since the bar association and State Bar could show no more than that their minimum-fee schedule "complemented" actions of the State, id., at 791, 95 S.Ct., at 2015, the scheme was not immune from the antitrust laws. Cf. Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035.
Unlike Goldfarb, this case does not involve any anticompetitive activity by private persons. As noted in Bates v. State Bar of Arizona, 433 U.S. 350, 361, 97 S.Ct. 2691, 2697, 53 L.Ed.2d 810, actions of governmental bodies themselves present "an entirely different case" falling squarely within the rule of Parker v. Brown. Although the State Bar in Goldfarb was "a state agency for some limited purposes," 421 U.S., at 791, 95 S.Ct., at 2015, the price fixing it fostered was for the private benefit of its members and its actions were essentially those of a private professional group. Cf. Asheville Tobacco Board of Trade, Inc. v. FTC, 263 F.2d 502, 508-510 (CA4). Unlike a city, the Virginia State Bar surely is not "a political subdivision of the State."8
By requiring that a city show a legislative mandate for its activity, the plurality today blurs, if indeed it does not erase, this logical distinction between private and governmental action. In Goldfarb and in Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141, the Court held that private action must be compelled by the state legislature in order to escape the reach of the Sherman Act. State compulsion is an appropriate requirement when private persons claim that their anticompetitive actions are not their own but the State's, since a State cannot immunize private anticompetitive conduct merely by permitting it.9 But it is senseless to require a showing of state compulsion when the State itself cts through one of its governmental subdivisions. See New Mexico v. American Petrofina, Inc., 501 F.2d 363, 369-370 (CA9).
The separate opinion of THE CHIEF JUSTICE does not rely on any distinctions between States and their political subdivisions. It purports to find a simpler reason for subjecting the petitioners to antitrust liability despite the fact that they are governmental bodies, namely, that Parker v. Brown does not protect "a State's entrepreneurial personality." Ante, at 422.10 But this distinction is no more substantial a basis for disregarding the governmental action immunity in this case than the reasons advanced by the plurality.
A State may choose to regulate private persons providing certain goods or services, or it may provide the goods and services itself. The State's regulatory body in the former case, or a state-owned utility in the latter, will necessarily make economic decisions. These decisions may be responsive to similar concerns, and they may have similar anticompetitive effects.11 Yet, according to THE CHIEF JUSTICE, the former type of governmental decision is immune from antitrust liability while the latter is not.
There is no basis for this distinction either in the Sherman Act itself or in our prior cases interpreting it. To the contrary, Parker v. Brown established that governmental actions are not regulated by the Sherman Act. See supra, at 428-430. And, as this Court has previously said:
" 'Government is not partly public or partly private, depending upon the governmental pedigree of the type of a particular activity or the manner in which the Government conducts it.' Federal Crop Insurance Corp. v. Merrill, 332 U.S. 380, 383-384, 68 S.Ct. 1, 92 L.Ed. 10. On the other hand, it is hard to think of any governmental activity on the 'operational level,' our present concern, which is 'uniquely governmental,' in the sense that its kind has not at one time or another been, or could not conceivably be, privately performed." Indian Towing Co. v. United States, 350 U.S. 61, 67-68, 76 S.Ct. 122, 126, 100 L.Ed. 48.
Nonetheless THE CHIEF JUSTICE would treat some governmental actions as governmental for purposes of the antitrust laws, and some as if they were not governmental at all.
Moreover, the scope of the immunity envisioned by THE CHIEF JUSTICE is virtually impossible to determine. The distinction between "proprietary" and "governmental" activities has aptly been described as a "quagmire." Id., at 65, 76 S.Ct., at 124. The "distinctions [are] so finespun and capricious as to be almost incapable of being held in the mind for adequate formulation." Id., at 68, 76 S.Ct., at 126. The separate opinion of THE CHIEF JUSTICE does nothing to make these distinctions any more substantial or understandable.12 Indeed, even a moment's consideration of the range of services provided today by governments shows how difficult it is to determine whether or not they are "proprietary." For example, if a city or State decides to provide water service to its citizens at cost on a monopoly basis, is its action to be characterized as "proprietary"? Whether it is "proprietary" or not, it is surely an act of government, as are the petitioners' actions in this case. Cf. Lowenstein v. Evans, 69 F. 908 (CC S.C.).13 But THE CHIEF JUSTICE, like the plurality, ignores what seems to me the controlling distinction in this case, that between private and governmental action.
Under our federal system, a State is generally free to allocate its governmental power to its political subdivisions as it wishes.14 A State may decide to permit its municipalities to exercise its police power without having to obtain approval of each law from the legislature.15 Such local self-government serves important state interests. It allows a state legislature to devote more time to statewide problems without being burdened with purely local matters, and allows municipalities to deal quickly and flexibly with local problems. But today's decision, by demanding extensive legislative control over municipal action, will necessarily diminish the extent to which a State can share its power with autonomous local governmental bodies.
This will follow from the plurality's emphasis on state legislative action, and the vagueness of the criteria it announces.16 First, it is not clear from the plurality opinion whether a municipal government's actions will be immune from the Sherman Act if they are merely "authorized" by a state legislature or whether they must be legislatively "directed" in order to enjoy immunity. While the plurality uses these terms interchangeably, they can have very different meanings. See Cantor v. Detroit Edison, Co., 428 U.S., at 592-593, 96 S.Ct., at 3117-3118. A municipality that is merely "authorized" by a state statute to provide a monopoly service thus cannot be certain it will not be subject to antitrust liability if it does so.
Second, the plurality gives no indication of how specifically the legislature's "direction" must relate to the "action complained of." Reference to the facts of this case will show how elusive the plurality's test is. Stripped to its essentials the counterclaim alleged that the petitioners engaged in sham litigation, maintained their monopolies by debenture covenants, foreclosed competition by long-term supply contracts, and tied the sale of gas and water to the sale of electricity. Broadly speaking, these actions could be characterized as bringing lawsuits, issuing bonds, and providing electric and gas service, all of which are activities authorized by state statutes.17 But in affirming the judgment of the Court of Appeals the Court makes evident that it does not consider these statutes alone a sufficient "mandate" to the cities.
On the other hand, the plurality states that a city need not "point to a specific, detailed legislative authorization before it properly may assert a Parker defense to an antitrust suit." Ante, at 415. Thus, it seems that the petitioners need not identify a statute compelling each lawsuit, each contract, and each debenture covenant.18 But what intermediate showing of legislative authorization, approval, or command will meet the plurality's test I am unable to fathom.19
Finally, state statutes often are enacted with little recorded legislative history,20 and the bare words of a statute will often be unilluminating in interpreting legislative intent. For example, do the Louisiana statutes permitting the petitioners to operate public utilities21 "contemplate" that the petitioners might tie the sale of gas to the sale of electricity? Do those statutes, indeed, "contemplate" that electric service will be provided to city residents on a monopoly basis? Without legislative history or relevant statutory language, any answer to these questions would be purely a creation of judicial imagination.22
As a practical result of the uncertainties in today's opinions,23 and of the plurality's emphasis on state legislative action, a prudent municipality will probably believe itself compelled to seek passage of a state statute requiring it to engage in any activity which might be considered anticompetitive. Each time a city grants an exclusive franchise, or chooses to provide a service itself on a monopoly basis, or refuses to grant a zoning variance to a business,24 or even—as alleged in this case brings litigation on behalf of its citizens, state legislative action will be necessary to ensure that a federal court will not subsequently decide that the activity was not "contemplated" by the legislature. Thus, the effect of today's decision is greatly to impair the ability of a State to delegate governmental power broadly to its municipalities.25 Such extensive interference with the fundamentals of state government is not a proper function of the federal judiciary.26
Today's decision will cause excessive judicial interference not only with the procedures by which a State makes its governmental decisions, but with their substance as well. States should be "accorded wide latitude in the regulation of their local economies," New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513, 2517, 49 L.Ed.2d 511; and in "the manner in which they will structure delivery of those governmental services which their citizens require." National League of Cities v. Usery, 426 U.S., at 847, 96 S.Ct., at 2472. The antitrust liability the Court today imposes on municipal governments will sharply limit that latitude.
First, the very vagueness and uncertainty of the new test for antitrust immunity is bound to discourage state agencies and subdivisions in their experimentation with innovative social and economic programs.27 In the exercise of their powers local governmen al entities often take actions that might violate the antitrust laws if taken by private persons, such as granting exclusive franchises, enacting restrictive zoning ordinances, and providing public services on a monopoly basis. But a city contemplating such action in the interest of its citizens will be able to do so after today only at the risk of discovering too late that a federal court believes that insufficient statutory "direction" existed, or that the activity is "proprietary" in nature.
Second, the imposition of antitrust liability on the activities of municipal governments will allow the sort of wide-ranging inquiry into the reasonableness of state regulations that this Court has forsworn.28 For example, in City of New Orleans v. Dukes, supra, a city ordinance which, to preserve the character of a historic area, prohibited the sale of food from pushcarts unless the vendor had been in business for at least eight years, was challenged under the Equal Protection Clause of the Fourteenth Amendment. The Court upheld the constitutional validity of the ordinance. But it now appears that if Dukes had proceeded under the antitrust laws and claimed that the ordinance was an unreasonably anticompetitive limit on the number of pushcart vendors, he might well have prevailed unless New Orleans could establish that the Louisiana Legislature "contemplated" the exclusion of all but a few pushcart vendors from the historic area. The "wide latitude" of the States "in the regulation of their local economies," exercised in Dukes by the city to which this power to regulate had been delegated, could thus be wholly stifled by the application of the antitrust laws.
Finally, today's decision will impose staggering costs on the thousands of municipal governments in our country. In this case, a not atypical antitrust action, the respondent claimed that it had suffered damages of $180 million as a result of only one of the antitrust violations it alleged. Trebled, this amounts to $540 million on this claim alone, to be recovered from cities with a combined population (in 1970) of about 75,000.29 A judgment of this magnitude would assure bankruptcy for almost any municipality against which it might be rendered.30 Even if the petitioners ultimately prevail, their citizens will have to bear the rapidly mounting costs of antitrust litigation through increased taxes or decreased services.31 The prospect of a city closing its schools, discharging its policemen, and curtailing its fire department in order to defend an antitrust suit would surely dismay the Congress that enacted the Sherman Act.32
I join Mr. Justice STEWART's dissent with the exception of Part II-B, but wish to note that I do not take his opinion as reaching the question whether petitioners should be immune under the Sherman Act even if found to have been acting in concert with private parties. To grant immunity to municipalities in such a circumstance would go beyond the protections previously accorded officials of the States themselves. See Parker v. Brown, 317 U.S. 341, 351-352, 63 S.Ct. 307, 314, 87 L.Ed. 315 (1943) ("[W]e 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"). The Court of Appeals did not have the opportunity to rule on how a "conspiracy with private parties" exception to municipalities' general immunity should be limited, if indeed such an exception is appropriate at all. If the view that municipalities are not subject to the full reach of Sherman Act liability had commanded a majority, a remand for consideration of this more limited exception would be in order.
In light of the fact that the plurality and THE CHIEF JUSTICE have concluded that municipalities should be subject to broad Sherman Act liability, I must question the nonchalance with which the Court puts aside the question of remedy. Ante, at 402, and n.22. It is a grave act to make governmental units potentially liable for massive treble damages when, however "proprietary" some of their activities may seem, they have fundamental responsibilities to their citizens for the provision of life-sustaining services such as police and fire protection. The several occasions in the past when the Court has found that Congress intended to subject municipalities and States to liability as "persons" or "corporations" do not provide the support for today's holding that the plurality opinion would pretend. Ante, at 400-402, and nn. 19-21. The Court cites previous constructions of the Elkins Act; the federal tax on sellers of alcoholic beverages; and the Shipping Act, 1916. But the financial penalties available under those Acts do not even approach the magnitude of the treble-damages remedy provided by the antitrust laws.1 Nor has the Court come to grips with the plainly mandatory language of § 4 of the Clayton Act, 15 U.S.C. § 15 (1976 ed.): "Any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws . . . shall recover threefold the damages by him sustained" (emphasis supplied), and the repeated occasions on which Congress has rejected proposals to make the treble-damages remedy discretionary.2 It is one thing to leave open the question of remedy if there is a conceivable defense to damages whose theory is consistent with the mandatory language of the Clayton Act (e. g., in the case of private utilities subject to state tariffs, that their conduct was required by state law and hence was involuntary). See Cantor v. Detroit Edison Co., 428 U.S. 579, 614-615, n.6, 96 S.Ct. 3110, 3128-3129, 49 L.Ed.2d 1141 (1976) (opinion concurring in judgment). It is quite another to delay the question of remedy in the absence of any suggested basis for a defense, especially where the prospect of insolvency for petitioner cities would so threaten the welfare of their inhabitants. The sensible course, it seems to me, is to consider the range of liability in light of the range of defendants for whom Sherman Act penalties would be appropriate.
La.Rev.Stat.Ann. § 33:1326 (West 1951); §§ 33:4162, 33:4163 (West 1950).
LP&L does not allege that it directly competes with the city of Lafayette, but does allege that the city of Plaquemine imposed tying arrangements which injured it. See Respondent's Second Amended Counterclaim, App. 33-34; Affidavit of J. M. Wyatt, Senior Vice President of LP&L, id., at 37.
The counterclaim, as amended, alleged that the petitioners, together with a nonparty electric cooperative, had conspired to engage in sham litigation against LP&L to prevent the financing with the purpose and effect of delaying or preventing the construction of a nuclear electric-generating plant, to eliminate competition within the municipal boundaries by use of covenants in their respective debentures, to exclude competition in certain markets by using long-term supply agreements, and to displace LP&L in certain areas by requiring customers of LP&L to purchase electricity from petitioners as a condition of continued water and gas service.
Saenz was a treble-damages action by a slide-rule manufacturer who alleged a conspiracy between a state agency, the University Interscholastic League (UIL), its director, and a private competitor of Saenz to effect the rejection of Saenz products for use in interscholastic competition among Texas public schools. In Saenz the Court of Appeals affirmed the District Court's dismissal of the action against the UIL and its director on the ground that as a state agency and a state official, they were not answerable under the Sherman Act.
In entering its order dismissing the counterclaim, the District Court made an express determination that there was no just reason for delay and expressly directed the entry of judgment for plaintiffs pursuant to Fed.Rule Civ.Proc. 54(b). This action designated the dismissal as a final appealable order. See Liberty Mutual Ins. Co. v. Wetzel, 424 U.S. 737, 742-743, 96 S.Ct. 1202, 1205-1206, 47 L.Ed.2d 435 (1976).
The word "person" or "persons" is used repeatedly in the antitrust statutes. For examples, see 15 U.S.C. § 1 (1976 ed.) ("Every person who shall make any contract or engage in any combination or conspiracy hereby declared to be illegal shall be deemed guilty of a felony . . ."); 15 U.S.C. § 2 (1976 ed.) ("Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a felony . . ."); 15 U.S.C. § 3 (1976 ed.) ("Every person [making a contract or engaging in a combination or conspiracy in restraint of trade in any Territory or the District of Columbia] shall be deemed guilty of a felony . . ."); 15 U.S.C. § 7 (1976 ed.) (defining the word "person" or "persons"); 15 U.S.C. § 8 (1976 ed.) (declaring illegal every contract, combination or conspiracy in restraint of trade by persons or corporations engaged in importing articles into the United States, and providing that any person so engaged shall be guilty of a misdemeanor).
Section 4 is quoted in full in n. 13, infra.
Section 4 has remained unchanged since its enactment in 1914. It is made applicable to all of the antitrust statutes by § 1 of the Clayton Act, 15 U.S.C. § 12 (1976 ed.).
When Congress wished to exempt municipal service operations from the coverage of the antitrust laws, it has done so without ambiguity. The Act of May 26, 1938, ch. 283, 52 Stat. 446, 15 U.S.C. § 13c (1976 ed.), grants a limited exemption to certain not-for-profit institutions for "purchases of their supplies for their own use" from the provisions of the Clayton Act as amended by the Robinson-Patman Act, 49 Stat. 1526, 15 U.S.C. §§ 13 to 13b and 21a (1976 ed.), which otherwise make it unlawful for a supplier to grant, or for an institution to induce, a discriminatory discount with respect to such supplies. Congress expressly included public libraries in this exemption. (Public libraries are, by definition, operated by local government. See I U. S. Office of Education, Biennial Surveys of Education in the United States, ch. 8 (Library Service 1938-1940), p. 27 (1947); 2 U.S. Office of Education, ch. 2 (Statistical Summary of Education, 1941-1942), p. 38; 32 Am. Library Assn. Bull. 272 (1938)).
See Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 229-235, 68 S.Ct. 996, 1002-1005, 92 L.Ed. 1328 (1948).
"Antitrust laws in general, and the Sherman Act in particular, are the Magna Carta of free enterprise. They are as important to the preservation of economic freedom and our free-enterprise system as the Bill of Rights is to the protection of our fundamental personal freedoms. And the freedom guaranteed each and every business, no matter how small, is the freedom to compete—to assert with vigor, imagination, devotion, and ingenuity whatever economic muscle it can muster." United States v. Topco Associates, 405 U.S. 596, 610, 92 S.Ct. 1126, 1135, 31 L.Ed.2d 515 (1972).
See also Mine Workers v. Pennington, 381 U.S. 657, 669-672, 85 S.Ct. 1585, 1588, 1592-1594, 14 L.Ed.2d 626 (1965). Pennington held that, regardless of the anticompetitive purpose or effect on small competing mining companies, the joint action of certain large mining companies and labor unions in lobbying before the Secretary of Labor in favor of legislation establishing a minimum wage for employees of contractors selling coal to the Tennessee Valley Authority and in lobbying before TVA to avoid coal purchases exempted from the legislation was not subject to antitrust attack. Cases subsequent to Pennington have emphasized the possible constitutional infirmity in the antitrust laws that a contrary construction would entail in light of the serious threat to First Amendment freedoms that would have been presented. See Continental Ore Co. v. Union Carbide & Carbon Corp., 370 U.S. 690, 707-708, 82 S.Ct. 1404, 1414-1415, 8 L.Ed.2d 777 (1962); California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 516, 92 S.Ct. 609, 614, 30 L.Ed.2d 642 (1972) (Stewart, J., concurring in judgment).
See also Olsen v. Smith, 195 U.S. 332, 344-345, 25 S.Ct. 52, 54-55, 49 L.Ed. 224 (1904).
Union Pacific considered the applicability to a city of § 1 of the Elkins Act, 32 Stat. 847, as amended, 34 Stat. 587, 49 U.S.C. § 41(1). That statute, in definitional language similar to that used in § 8 of the Sherman Act, makes it unlawful for "any person, persons, or corporation to offer, grant, or give, or to solicit, accept, or receive any rebate, concession, or discrimination in respect to the transportation of any property in interstate or foreign commerce by any [covered] common carrier . . . ." (Emphasis added.) Kansas City, Kan. (hereinafter Kansas), decided to develop its Public Levee as a metropolitan rail food terminal with wholesale and retail produce markets. Kansas constructed, operated, and owned the market, financing the development with municipal revenue bonds.
Another city, Kansas City, Mo. (hereinafter Missouri), also operated a rail food terminal within the same metropolitan area. Because Kansas believed that there was insufficient business in the metropolitan area to support both markets, it developed a plan to induce Missouri produce dealers to lease its facilities by offering cash payments and temporary reduction or abatement of rent. These payments exceeded the amounts needed to compensate the merchants for the costs of moving, settlement of existing leases, and disruption to business. Kansas adopted the payment plan by resolution, and its legality under Kansas law was sustained by the Kansas Supreme Court in a quo warranto proceeding. State ex rel. Parker v. Kansas City, 151 Kan. 1, 97 P.2d 10 , 98 P.2d 101 (1939).
The Missouri terminal was served by a number of railroads, but the Kansas terminal was served virtually exclusively by the Union Pacific Railroad. As merchants moved from Missouri to Kansas, the Union Pacific's traffic necessarily increased while that of the other railroads shrank. The United States charged that the effect of Kansas' concessions to merchants, was to permit them to ship produce over the Union Pacific more cheaply than on the competing railroads serving the Missouri terminal and, in effect, amounted to a rebate from Union Pacific's tariffs. The District Court permanently enjoined Kansas from giving cash or rental credits to Missouri dealers to move or for moving to Kansas.
On appeal to this Court, Kansas argued that because the concessions were lawful under state law, it could not be enjoined from making them, and the United States argued that the municipality was a "person" within the meaning of the statute and therefore subject to the Act on the same terms
as a private corporation. See Brief for Appellants, O.T. 1940, No. 594, pp. 233-235, 244-256; Brief for the United States, O.T. 1940, No. 594, p. 72. See generally id., at 59-68, 69-75.
The Court held that the municipality was a "person" subject to the Act, and, with a modification not important here, upheld the permanent injunction against it. Mr. Justice Roberts, in dissent, made the argument made by the cities here, that the statutory phrase "every person" was not sufficiently specific to justify the conclusion that Congress wished to subject municipal corporations and their officers to the criminal penalties for which the Act provided. It is significant that the cities' argument was rejected in the context of the antirebate provisions of the Elkins Act, a statute which essentially is an antitrust provision serving the same purposes as the anti-price-discrimination provisions of the Robinson-Patman Act. Accord, Slater, Antitrust and Government Action: A Formula For Narrowing Parker v. Brown, 69 Nw.U.L.Rev. 71, 89 n. 100 (1974).
Ohio v. Helvering sustained a federal tax liability imposed upon the State of Ohio in its business as a distributor of alcoholic beverages. The statute, Rev.Stat. § 3244 (1978), imposed a tax upon "[e]very person who sells or offers for sale [alcoholic beverages]." The applicable definitional section, Rev.Stat. § 3140 (1978), provided: [W]here not otherwise distinctly expressed or manifestly incompatible with the intent thereof, the word 'person,' as used in this title, shall be construed to mean and include a partnership, association, company, or corporation, as well as a natural person." Helvering stated that "[w]hether the word 'person' or 'corporation' includes a state or the United States depends upon the connection in which the word is found," 292 U.S., at 370, 54 S.Ct., at 727, and held that "the state itself, when it becomes a dealer in intoxicating liquors, falls within the reach of the tax either as a 'person' under the statutory extension of that word to include a corporation, or as a 'person' without regard to such extension." Id., at 371, 54 S.Ct., at 727.
California held that a city and State are subject to §§ 16 and 17 of the Shipping Act, 1916, 39 Stat. 734, as amended, 46 U.S.C. §§ 815, 816, making unlawful certain practices of "person[s]," defined by § 1, 46 U.S.C. § 801, as including "corporations, partnerships, and associations, existing under or authorized by the laws of the United States, or any State . . . ."
Cf. Hospital Building Co. v. Trustees of Rex Hosp., 425 U.S. 738, 740, 96 S.Ct. 1848, 1850, 48 L.Ed.2d 338 (1976). We use the allegations of the counterclaim only as a ready and convenient example of the kinds of activities in which a municipality may engage in the operation of its utility business which would have an anticompetitive effect transcending its municipal borders.
While the investor-owned utilities in Louisiana are subject to regulation by the Louisiana Public Utilities Commission, municipally owned utilities are not subject to the jurisdiction of the PUC and hence apparently need not conform their expansion policies to whatever plans the PUC might deem advisable for coordinating service. See n. 44, infra.
See generally California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972).
Petitioners have urged that the antimonopoly principles of the antitrust laws are inconsistent with the very nature of government operating as a monopoly in the public interest. They suggest that to apply antitrust principles to local governments will necessarily interfere with the execution of governmental programs. We do not agree. Acting as agents at the direction of the State, local governments are free to implement state policies without being subject to the antitrust laws to the same extent as would the State itself. See infra, at 413-417. On the other hand, it would not hinder governmental programs to require that cities authorized to provide services on a monopoly basis refrain from, for example, predatory conduct not itself directed by the State.
"The prohibitions of the Sherman Act were not stated in terms of precision or of crystal clarity and the Act itself did not define them. In consequence of the vagueness of its language, perhaps not uncalculated,[*] the courts have been left to give content to the statute, and in the performance of that function it is appropriate that courts should interpret its word in the light of its legislative history and of the particular evils at which the legislation was aimed. . . ."
"[*] See Debates, 21 Cong.Rec. 2460, 3148; 2 Hoar, Autobiography of Seventy Years 364; Senator Edmunds, The Interstate Trust and Commerce Act of 1890, 194 No.Am.Rev. 801, 813, 'after most careful and earnest consideration by the Judiciary Committee of the Senate it was agreed by every member that it was quite impracticable to include by specific description all the acts which should come within the meaning and purpose of the words "trade" and "commerce" or "trust," or the words "restraint" or "monopolize," by precise and all-inclusive definitions; and that these were truly matters for judicial consideration.'
"See also Senator Hoar who with Senator Edmunds probably drafted the bill (see A. H. Walker, History of the Sherman Law (1910), p. 27-28) in 36 Cong.Rec. 522, Jan. 6, 1903: 'We undertook by law to clothe the courts with the power and impose on them and the Department of Justice the duty of preventing all combinations in restraint of trade. . . . ' "
Apex Hosiery Co. v. Leader, 310 U.S. 469, 489, and n. 10, 60 S.Ct. 982, 990, 84 L.Ed. 1311 (1940).
The political-redress argument could also be made in the context of anticompetitive actions engaged in by the State itself. Our rejection of the argument here is not, however, inconsistent with the Parker doctrine. Parker did not reason that political redress is an adequate substitute for direct enforcement of the antitrust laws. Rather, Parker held that, in the absence of congressional intent to the contrary, a purpose that the antitrust laws be used to strike down the State's regulatory program imposed as an act of government would not be inferred. To the extent that the actions of a State's subdivisions are the actions of the State, the Parker exemption applies. See infra, at 413-417.
1 U.S. Bureau of the Census, 1972 Census of Governments, Governmental Organization 1 (1973). This figure (62,437) represents the total of county, municipal, township, and special district governments, but does not include the 15,781 independent school districts in the United States which, of course, have a much more narrowly defined range of functions and powers than those of local governmental units generlly. See id., at 1-5.
See, id., at 4-5.
See id., at 1-3.
See, e. g., Apex Hosiery Co. v. Leader, supra, 310 U.S., at 493-495, n. 15, 60 S.Ct., at 992-993, n. 15 (reviewing legislative history).
See United States v. Topco Associates, 405 U.S., at 610, 92 S.Ct., at 1134; Apex Hosiery Co. v. Leader, supra, 310 U.S., at 492-495, and n. 15, 60 S.Ct., at 992-993, and n. 15; Mandeville Island Farms, Inc. v. American Crystal Sugar Co., 334 U.S. 219, 229-235, 68 S.Ct. 996, 1002-1005, 92 L.Ed. 1328 (1948).
The state regulatory program involved in Parker furthered an important state interest which was consistent with federal policy. See Parker, 317 U.S., at 352-359, 63 S.Ct., at 314-317.
The plurality opinion in Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976), also analyzed a "state action" exemption claim in terms of whether the challenged anticompetitive action was taken pursuant to state command. Detroit Edison, an electric utility regulated by Michigan, was charged by an independent seller of light bulbs with antitrust violations in the operation of a program which provided light bulbs without extra cost to electricity customers. Detroit Edison, relying on Parker, defended on the ground that the light-bulb program was included in its rate filed with and approved by the State Public Service Commission and that state law required it to follow the terms of the tariff as long as it was in effect. Cantor rejected the claim, holding that since no Michigan statutes regulated the light-bulb industry, and since neither the Michigan Legislature nor the Public Service Commission had passed upon the desirability of such a light-bulb program, the Commission's approval of Detroit-Edison's program did not "implement any statewide policy relating to light bulbs" and that "the State's policy is neutral on the question whether a utility should, or should not, have such a program." 428 U.S., at 585, 96 S.Ct., at 3114. THE CHIEF JUSTICE, while not joining all of the plurality opinion, agreed with this analysis. Id., at 604-605, 96 S.Ct., at 3123-3124.
Cantor's analysis is not, however, necessarily applicable here. Cantor was concerned with whether anticompetitive activity in which purely private parties engaged could, under the circumstances of that case, be insulated from antitrust enforcement. The situation involved here, on the other hand, presents the issue of under what circumstances a State's
subdivisions engaging in anticompetitive activities should be deemed to be acting as agents of the State.
Petitioners argue that Goldfarb, like Cantor v. Detroit Edison Co., supra, expresses a limitation upon the circumstances under which private parties may be immunized from suit under the antitrust laws. They seek to avoid our holding in Goldfarb by suggesting that the State Bar, although a state agency by law acting in its official capacity, was somehow not a state agency because its official actions in issuing ethical opinions, see 421 U.S., at 791 n. 21, 95 S.Ct., at 2015, benefited its member-lawyers by discouraging price competition. We think it obvious that the fact that the ancillary effect of the State Bar's policy, or even the conscious desire on its part, may have been to benefit the lawyers it regulated cannot transmute the State Bar's official actions into those of a private organization. In addition to the decision in this case, every other Court of Appeals which has considered the immunity of state instrumentalities after Goldfarb has regarded it as having held that anticompetitive actions of a state instrumentality not compelled by the State acting as sovereign are not immune from the antitrust laws. City of Fairfax v. Fairfax Hospital Assn., 562 F.2d 280, 284-285 (CA4 1977); id., at 288 (concurring opinion); Kurek v. Pleasure Driveway & Park Dist., 557 F.2d 580, 588-591 (CA7 1977), cert. pending, No. 77-440; Duke & Company, Inc. v. Foerster, 521 F.2d, at 1280.
The acknowledgment of our Brother STEWART's dissent, post, at 433, that, as noted in Indian Towing Co. v. United States, 350 U.S. 61, 67-68, 76 S.Ct. 122, 126, 100 L.Ed. 48 (1955), " 'Government is not partly public or partly private, depending upon the governmental pedigree of the type of a particular activity or the manner in which the Government conducts it,' " (citation omitted), discloses the fallacy of his effort to distinguish Goldfarb on the ground that, although the State Bar was " 'a state agency for some limited purposes,' . . . the price fixing it fostered was for the private benefit of its members and its actions were essentially those of a private professional group." Post, at 431.
Without explication, our Brother STEWART's dissent states that our "reliance . . . on the basically irrelevant body of law under the Eleventh Amendment" is unfounded. Ibid. Rather, it is the statement that is unfounded. For the longstanding principle, of which Congress in 1890 was well aware, see Lincoln County v. Luning, 133 U.S. 529, 10 S.Ct. 363, 33 L.Ed. 766 (1890), is that political subdivisions are not as such sovereign. Certainly, nothing in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), even remotely suggested the contrary; we search in vain for anything in that case that establishes a constructional principle of presumptive congressional deference in behalf of cities Indeed our emphasis today in our conclusion, that municipalities are "exempt" from antitrust enforcement when acting as state agencies implementing state policy to the same extent as the State itself, makes it difficult to see how National League of Cities is even tangentially implicated.
"While state legislatures exercise extensive power over their constituents and over the various units of local government, the States universally leave much policy and decisionmaking to their governmental subdivisions. Legislators enact many laws but do not attempt to reach those countless matters of local concern necessarily left wholly or partly to those who govern at the local level." Avery v. Midland County, 390 U.S. 474, 481, 88 S.Ct. 1114, 1118, 20 L.Ed.2d 45 (1968).
Although Avery concluded that the actions of local government are the actions of the State for purposes of the Fourteenth Amendment, state action required under Parker has di ferent attributes. Cf. Edelman v. Jordan, 415 U.S. 651, 667 n. 12, 94 S.Ct. 1347, 1357-1358, 39 L.Ed.2d 662 (1974).
Indeed, state policy may be contrary to that adopted by a political subdivision, yet, for a variety of reasons, might not render the local policy unlawful under state law. For example, a state public utilities commission might adopt, though we are not aware that the Louisiana PUC has done so, a policy prohibiting the specific anticompetitive practices in which the municipality engages, yet be unable to enforce that policy with respect to municipalities because it lacks jurisdiction over them. (The Louisiana PUC, in litigation unrelated to this case, has been held to lack jurisdiction over municipal utility systems whether operating within or without the municipality. City of Monroe v. Louisiana Public Serv. Comm'n, No. 177,757—Div. "I" (19th Jud. Dist. Ct., Sept. 14, 1976).) If that were the case, and assuming that there were no other evidence to the contrary, it would be difficult to say that state policy fosters, much less compels, the anticompetitive practices.
Louisiana Rev.Stat.Ann. § 33:1334(G) (West Supp.1977) provides another illustration of the fact that a particular activity in which a subdivision technically has power to engage does not necessarily conform to, and may conflict with, state policy. Louisiana has authorized municipalities to create intergovernmental commissions as municipal instrumentalities jointly to construct and operate public services including utilities. §§ 33:1324, 33:1331-33:1334 (West Supp.1977). Such commissions are, by definition, political subdivisions of the State. § 33:1334(D) (West Supp.1977). Section 1334(G) nevertheless provides that "[n]othing in this Chapter shall be construed to grant an immunity to or on behalf of any [such] public instrumentality . . . from any antitrust laws of the state or of the United States."
We reject petitioners' fallback position that an antitrust claim will not lie for anticompetitive municipal action which, though not state directed, is lawful under state law. See Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035 (1951); Northern Securities Co. v. United States, 193 U.S. 197, 344-351, 24 S.Ct. 436, 459-462, 48 L.Ed. 679 (1904); cf. Union Pacific R. Co. v. United States, 313 U.S. 450, 61 S.Ct. 1064, 85 L.Ed. 1453 (1941) (discussed in n. 19, supra ). See also n. 44, supra.
Restating a theme made and rejected before, see Cantor v. Detroit Edison Co., 428 U.S., at 640, 96 S.Ct., at 3140 (Stewart, J., dissenting), our Brother STEWART's dissent, post, at 438-440, likens judicial enforcement of the antitrust laws to a regime of substantive due process used by federal judges to strike down state and municipal economic regulation thought by them unfair. That analogy, of course, ignores the congressional judgment mandating broad scope in enforcement of the antitrust laws and simply reflects the dissent's view that such enforcement with respect to cities is unwise.
While the majority and dissent disagreed in Otter Tail over whether the specific practices of which plaintiffs complained could be regarded as unlawful anticompetitive restraints in light of the existence of federal regulation, there was agreement that a lawful monopolist could violate the antitrust laws. Compare 410 U.S., at 377-382, 93 S.Ct., at 1029-1032 with id., at 390-391, n. 7, 93 S.Ct., at 1035-1036 (Stewart, J., concurring in part and dissenting in part).
It may be that certain activities which might appear anticompetitive when engaged in by private parties, take on a different complexion when adopted by a local government. See generally Posner, The Proper Relationship Between State Regulation and the Federal Antitrust Laws, 49 N.Y.U.L.Rev. 693, 705 (1974).
The District Court did not, of course, make a formal finding of fact to this effect since the counterclaim was disposed of on the basis of pleadings. Nonetheless, the District Court could reasonably conclude, as a matter of law, that the Cities are engaging in business activities which have as their aim the production of revenues in excess of costs. It certainly is the case that these Cities are attempting to provide a public service, but it is likewise undeniable that they seek to do so in the most profitable way. The Cities allege in their complaint, for example, that they have "been prevented from profitably expanding their businesses." App. 14. While it is correct that the Cities are ordinarily constrained from applying their net earnings as a private corporation would, this does not detract from their competitive posture and resulting incentive to engage in anticompetitive practices.
Our conceptions of the limits imposed by federalism are bound to evolve, just as our understanding of Congress' power under the Commerce Clause has evolved. Consequently, since we find it appropriate to allow the ambit of the Sherman Act to expand with evolving perceptions of congressional power under the Commerce Clause, a similar process should occur with respect to "state action" analysis under Parker. That is, we should not treat the result in the Parker case as cast in bronze; rather, the scope of the Sherman Act's power should parallel the developing concepts of American federalism.
Mr. Justice STEWART's dissent, post, at 433-434, attempts to blunt this analysis by noting that the "nongovernmental-governmental" distinction was criticized in Indian Towing Co. v. United States, 350 U.S. 61, 76 S.Ct. 122, 100 L.Ed. 48 (1955). I suggest no more, however, than what is obvious from our past cases: Petitioners' business activities are not entitled to per se exemption from the Sherman Act. This much ought to be quite clear from United States v. California, 297 U.S. 175, 56 S.Ct. 421, 80 L.Ed. 567 (1936), where the State operated a railroad, albeit without profit, and as a "public function." I cannot comprehend why the Cities here should be treated in a different manner. The only authority which Mr. Justice STEWART cites to the contrary, Lowenstein v. Evans, 69 F. 908 (CC SC 1895), was a case in which a State's complete monopolization of the liquor industry was challenged as violating the Sherman Act. But in that circumstance the State clearly directed the creation of a monopoly, thus bringing the matter within the Parker rationale. Compare Ohio v. Helvering, 292 U.S. 360, 54 S.Ct. 725, 78 L.Ed. 1307 (1934).
Such an ascertainment dovetails precisely with the law of Louisiana. There it is recognized that the powers of a municipal corporation are both public and private: As to the former, the city represents the State, discharging duties incumbent upon the State; as to the latter, it represents pecuniary and proprietary interests of individuals, and is held to the same responsibility as a private person. Hall v. City of Shreveport, 157 La. 589, 594, 102 So. 680, 681 (1925). A long line of Louisiana cases dealing explicitly with the subject of municipally owned electrical utilities holds that cities are to be governed by the same rules applicable to private corporations and individuals. See Hicks v. City of Monroe Utilities Comm'n, 237 La. 848, 112 So.2d 635 (1959); Elias v. Mayor of New Iberia, 137 La. 691, 69 So. 141 (1915); Hart v. Town of Lake Providence, 5 La.App. 294 (1926); Bannister v. City of Monroe, 4 La.App. 182 (1926).
While I agree with the plurality that a State may cause certain activities to be exempt from the federal antitrust laws by virtue of an articulated policy to displace competition with regulation, I would require a strong showing on the part of the defendant that the State so intended. Thus, I would not be satisfied, as the plurality and Court of Appeals apparently are, that the highest policymaking body in the State of Louisiana merely "contemplated" the activities being undertaken by the cities. See ante, at 415. I would insist, as the Court did in Goldfarb v. Virginia State Bar, 421 U.S. 773, 791, 95 S.Ct. 2004, 2015, 44 L.Ed.2d 572 (1975), that the State compel the anticompetitive activity. Moreover, I would have the Cities demonstrate that the exemption was not only part of a regulatory scheme to supersede competition, but that it was essential to the State's plan. Consequently, I do not disagree with the terms of the plurality's remand as such ; I would simply ask for a stronger showing on the part of the Cities. I join the judgment, however, and the directions of the remand, because they represent at a minimum what I believe we should demand of petitioners.
In Cantor this mode of analysis effectively answered Detroit Edison's claim that it was required by state law to engage in the allegedly anticompetitive activities. We "infer[red] that the State's policy [was] neutral on the question whether a utility should, or should not, have such a program," 428 U.S., at 585, 96 S.Ct., at 3115 (opinion of STEVEN, J.) (emphasis added), 604-605, 96 S.Ct., at 3125 (opinion of BURGER, C. J.), and consequently it could not be said that an exemption "was necessary in order to make the regulatory Act work."
Mr. Justice Blackmun joins all but Part II-B of this opinion.
As the plurality acknowledges, ante, at 393 n.8, Parker v. Brown did not create any exemption from the antitrust laws, but simply recognized that it was the intent of Congress that the Sherman Act should not apply to governmental action. It is thus hard to understand why the plurality invokes the doctrine that exemptions from the antitrust laws will not be lightly implied by subsequent enactment of a regulatory statute. This rule, which effects the accommodation of two federal statutes and rests on the principle that implied repeals are not favored, has no relevance to the Parker doctrine, which is based on an interpretation of the Sherman Act itself.
See also, e. g., 20 Cong.Rec. 1458 (1889) ("the practice, now becoming too common, of large corporations, and of single persons, too, of large wealth, so arranging that they dictate to the people of this country what they shall pay when they purchase, and what they shall receive when they sell"); 21 Cong.Rec. 2728 (1890) ("transaction[s] the only purpose of which is to extort from the community, monopolize, segregate, and apply to individual use, for the purposes of individual greed, wealth which ought properly and lawfully and for the public interest to be generally diffused over the whole community"); id., at 3147 (remarks of Sen. George).
That the Sherman Act was enacted to deal with combinations of individuals and corporations for private business advanta e has long been recognized by this Court. Eastern Railroad Presidents Conf. v. Noerr Motor Freight, Inc., 365 U.S. 127, 135-136, 81 S.Ct. 523, 528-529, 5 L.Ed.2d 464; Apex Hosiery Co. v. Leader, 310 U.S., at 492-493, 60 S.Ct., at 992, and n.15; Standard Oil Co. v. United States, 221 U.S. 1, 50, 58, 31 S.Ct. 502, 511, 515, 55 L.Ed. 619.
See Cantor v. Detroit Edison Co., 428 U.S. 579, 591, and n.24, 96 S.Ct. 3110, 3117, 49 L.Ed.2d 1141.
The Court assumed that California's program would violate the Sherman Act "if it were organized and made effective solely by virtue of a contract, combination or conspiracy of private persons individual or corporate," but noted that the program "was never intended to operate by force of individual agreement or combination." 317 U.S., at 350, 63 S.Ct., at 313. The Court found nothing in the Sherman Act or its legislative history to suggest that "it was intended to restrain state action or official action directed by a state"; rather, the Act was intended "to suppress combinations to restrain competition and attempts to monopolize by individuals and corporations." Id., at 351, 63 S.Ct., at 313. It was "a prohibition of individual and not state action." Id. at 352, 63 S.Ct. at 314.
See also, e. g., Trenton v. New Jersey, 262 U.S. 182, 185-186, 43 S.Ct. 534, 536, 67 L.Ed. 937; Hunter v. Pittsburgh, 207 U.S. 161, 178, 28 S.Ct. 40, 46, 52 L.Ed. 151; The Mayor v. Ray, 19 Wall. 468, 475, 22 L.Ed. 164; Bradford v. Shreveport, 305 So.2d 487 (La.).
Cf. Barnes v. District of Columbia, 91 U.S. 540, 544-545, 23 L.Ed. 440; The Mayor v. Ray, supra, at 475; East Hartford v. Hartford Bridge Co., 10 How. 511, 13 L.Ed. 518. Under Louisiana law the petitioners' powers are subject to complete legislative control. See Bradford v. Shreveport, supra.
That the particular factual and legal context is all important is shown by the fact that under other provisions of the Constitution a municipality is equated with a State. E. g., Waller v. Florida, 397 U.S. 387, 90 S.Ct. 1184, 25 L.Ed.2d 435 (Double Jeopardy Clause); Avery v. Midland County, 390 U.S. 474, 480, 88 S.Ct. 1114, 1118, 20 L.Ed.2d 45 (Fourteenth Amendment); Trenton v. New Jersey, supra (Impairment of Contract Clause). See also Doran v. Salem Inn., Inc., 422 U.S. 922, 927 n. 2, 95 S.Ct. 2561, 45 L.Ed.2d 648 (28 U.S.C. § 1254(2).
Worcester v. Street R. Co., 196 U.S. 539, 548, 25 S.Ct. 327, 329, 49 L.Ed. 591.
See Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035; Northern Securities Co. v. United States, 193 U.S. 197, 346, 24 S.Ct. 436, 460, 48 L.Ed. 679.
However, the District Court's "conclusion," ante, at 418, that the petitioners' electric utility service was a business activity engaged in for profit was not supported by any evidence (since the case was decided on a motion to dismiss) and is indeed challenged here by the petitioners in their reply brief.
Of course, the fact—heavily relied upon both by the plurality and THE CHIEF JUSTICE—that the actions of cities may have anticompetitive effects misses the point. The whole issue before the Court today is whether conduct that would concededly subject a private individual to liability because of its anticompetitive nature is proscribed by the antitrust laws when undertaken by a city.
In various places, the separate opinion of THE CHIEF JUSTICE refers to " 'business activit[ies] . . . in which a profit is realized,' " to "proprietary enterprises," to activities which have "the inherent capacity for economically disruptive anticompetitive effects," to those which are not "integral operation[s] in the area of traditional government functions," and to those not "the prerogative of the State."
This case, involving a state liquor monopoly, was cited with approval in Parker v. Brown, 317 U.S., at 352, 63 S.Ct., at 314.
See, e. g., Lockport v. Citizens for Community Action, 430 U.S. 259, 269, 97 S.Ct. 1047, 1054, 51 L.Ed.2d 313; Avery v. Midland County, 390 U.S., at 481-482, 88 S.Ct., at 1118-1119.
While THE CHIEF JUSTICE has not joined those portions of the plurality opinion that discuss what is necessary to show that a challenged activity was required by the State, he would apparently require a still stronger, and hence less justifiable, showing of state legislative compulsion. Ante, at 425-426 n.6.
"The inhabitants of the city shall continue a body politic and corporate by its present name and, as such, . . . may sue and be sued; . . . may acquire by condemnation or otherwise, construct, own, lease, and operate and regulate public utilities within or without the corporate limits of the city subject only to restrictions imposed by general law for the protection of other communities; . . . [and] may borrow money on the faith and credit of the city by issue or sale of bonds, notes, or other evidences of debt . . .."
The plurality's suggestion that the Louisiana Legislature has expressed a state policy that the activities of cities should be subject to the antitrust laws, ante, at 414-415 n.44, and 416, is both erroneous and irrelevant. Louisiana Rev.Stat.Ann. § 33:1334(G) (West Supp.1977) applies not to municipalities but only to utility commissions created jointly by several cities or counties; there is no comparable statute applicable to the petitioners. Moreover, the applicability of the federal antitrust laws is a matter of federal, not state, law; conversely, a State's restrictions on municipal action are a matter of state, not federal, law. A State can no more bring a person's conduct within the coverage of federal law when Congress has not done so than it can exempt a person's conduct from the operation of federal law if Congress has provided otherwise. Cf. Schwegmann Bros. v. Calvert Distillers Corp., 341 U.S. 384, 71 S.Ct. 745, 95 L.Ed. 1035.
The Court imposes yet another unwarranted limitation upon governmental immunity from the antitrust laws. Apparently, a municipality can claim immunity only if the state legislature has mandated its action "pursuant to state policy to displace competition with regulation or monopoly public service." Ante, at 413 (plurality opinion); see ante, at 425 (opinion of BURGER, C. J.). Even had the Louisiana State Legislature passed a law specifically compelling the petitioners to litigate in an effort to prevent respondent from constructing its nuclear generating facility, compelling them to insert restrictive covenants in their debentures, and compelling the tying arrangements complained of, could such a law fairly be described as "displac[ing] competition with regulation or monopoly public service"? Would the Court thus deny the cities immunity for their actions even if they were compelled by the State which controlled them?
See M. Price & H. Bitner, Effective Legal Research 73, 103 (3d ed. 1969).
See n.17, supra.
The vagueness of the test proposed in the separate opinion of THE CHIEF JUSTICE, see supra, at 433-434, will only add to the confusion of a city trying to protect itself from antitrust liability.
By imposing antitrust liability on "proprietary" governmental activities, the test adopted in the opinion of THE CHIEF JUSTICE would further deter States from choosing to provide services themselves rather than regulating others.
See Sailors v. Board of Education, 387 U.S. 105, 87 S.Ct. 1549, 18 L.Ed.2d 650; Williams v. Eggleston, 170 U.S. 304, 310, 18 S.Ct. 617, 619, 42 L.Ed. 1047; see also Baker v. Carr, 369 U.S. 186, 289-290, and n.23, 82 S.Ct. 691, 749-750, 7 L.Ed.2d 663, and cases cited (Frankfurter, J., dissenting).
See New State Ice Co. v. Liebmann, 285 U.S. 262, 311, 52 S.Ct. 371, 386, 76 L.Ed. 747 (Brandeis, J., dissenting).
Ferguson v. Skrupa, 372 U.S. 726, 83 S.Ct. 1028, 10 L.Ed.2d 93.
U. S. Department of Commerce, Bureau of the Census, 1970 Census of Population, Number of Inhabitants, United States Summary, Table 31 (1971).
The Court indicates that the remedy of treble damages might not be "appropriate" in antitrust actions against a municipality. Ante, at 401-402, and n.22. But the language of § 4 of the Clayton Act, 15 U.S.C. § 15 (1976 ed.), is mandatory on its face: It requires that "[a]ny person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws . . . shall recover threefold the damages by him sustained" (emphasis supplied). Cf., e. g., 35 U.S.C. § 284. And the legislative history cited by Mr. Justice BLACKMUN, post, at 443 n.2, demonstrates that Congress has understood the treble-damages provision to be mandatory and has refused to change it. The Court does not say on what basis a district court could possibly disregard this clear statutory command. Cf. Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134, 88 S.Ct. 1981, 20 L.Ed.2d 982.
Legal fees to defend one current antitrust suit have been esti ated as at least one-half million dollars a month. N. Y. Times, June 27, 1977, p. 41, col. 6; id., Sept. 4, 1977, section 3, p. 5, col. 1.
Treble-damages liability can, of course, be ruinous to a private corporation as well. But a private corporation, organized for the purpose of seeking private profit, is surely very different from a city providing essential governmental functions, and shareholders do not stand in the same relation to their corporation as do residents or taxpayers to the city in which they live. An investment in a corporation is essentially a business decision; a shareholder takes the risks of corporate losses in the hope of corporate profits. A citizen's relationship to his city government is obviously far different.
Under the federal tax on sellers of alcoholic beverages, 26 U.S.C. §§ 11 and 205 (1926 ed.), construed in Ohio v. Helvering, 292 U.S. 360, 370-371, 54 S.Ct. 725, 727, 78 L.Ed. 1307, (1934), the potential liability of the State of Ohio was $25 for each retail, and $100 for each wholesale, outlet. Under §§ 16 and 17 of the Shipping Act, 1916, 46 U.S.C. §§ 815, 816 (1940 ed.), construed in California v. United States, 320 U.S. 577, 585-586, 64 S.Ct. 352, 356, 88 L.Ed. 322 (1944), a violation was a misdemeanor punishable by a $5,000 fine. The Court's only arguable support lies in § 1 of the Elkins Act, 49 U.S.C. § 41, construed in Union Pacific R. Co. v. United States, 313 U.S. 450, 61 S.Ct. 1064, 85 L.Ed. 1453 (1941). Even there, the potential liability of a municipality not acting as a common carrier is a $20,000 fine, and, were illegal transportation rebates to be received by the municipality, three times the amount of the rebate. Even if a municipality were held to be operating a common carrier under that Act, potential financial liability is limited to the fine and the actual damages caused by the prohibited conduct. 49 U.S.C. § 8.
E. g., H. R. 4597, 83d Cong., 1st Sess. (1953); H. R. 6875, 84th Cong., 1st Sess. (1955); H. R. 978, 85th Cong., 1st Sess. (1957); H. R. 1184, 86th Cong., 1st Sess. (1959); H. R. 190, 87th Cong., 1st Sess. (1961). See also Hearings on H. R. 4597 before Subcommittee No. 3 of the House Committee on the Judiciary, 83d Cong., 1st Sess. (1953); Hearings before the Antitrust Subcommittee of the House Committee on the Judiciary, 84th Cong., 1st Sess., 189, 509-522, 2246-2249 (1955).