Opinion ID: 148091
Heading Depth: 4
Heading Rank: 1

Heading: Specific Authorization vs. Reasonably Foreseeable

Text: As a preliminary matter, we must first resolve a dispute among the parties over the proper standard in evaluating Midcal 's first prong. Plaintiffs argue that the district court wrongly applied a lesser foreseeability standard in place of Midcal 's clear articulation requirement, which, they argue, requires a more specific or express authorization of any anti-competitive conduct. The CTTC, however, correctly points out that the Supreme Court has not required express authorization of particular anticompetitive acts and has applied state action immunity when the actions were a foreseeable result of a broader statutory authorization. For example, in City of Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 111 S.Ct. 1344, 113 L.Ed.2d 382 (1991) ( Omni ), a billboard company sued the city for passing an ordinance effectively preventing the company from entering the billboard market. Id. at 368-69, 111 S.Ct. 1344. The city allegedly passed the ordinance to favor the existing billboard company, a local company with deep roots in the community. Id. at 367, 111 S.Ct. 1344. The Court held that the city's actions were nonetheless entitled to Parker state action immunity because they were an authorized implementation of state policy. Id. at 370-71, 111 S.Ct. 1344. The Court reasoned that the city acted within its state-given authority to pass a zoning ordinance, and that suppression of competition was a foreseeable consequence of passing such an ordinance. Id. at 373, 111 S.Ct. 1344. The Court rejected the contention that this requirement can be met only if the delegating statute explicitly permits the displacement of competition, and held that [i]t is enough ... if suppression of competition is the `foreseeable result' of what the statute authorizes. Id. at 372-73, 111 S.Ct. 1344. Similarly, in Town of Hallie v. City of Eau Claire, neighboring towns filed suit against the City of Eau Claire, arguing that the city held an unlawful monopoly over sewage treatment services. 471 U.S. 34, 37, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985). The Court held that the city's actions were immunized because they were a foreseeable result of the state legislature's statutory authorization to municipalities to provide (or refuse to provide) sewage services to unincorporated areas. Id. at 42, 105 S.Ct. 1713. The Court again noted that a legislature need not expressly state in the statute or legislative history that it intends for the action to have anticompetitive effects, so long as the legislature had contemplated the action that was taken. Id. (We think it is clear that anticompetitive effects logically would result from this broad authority to regulate). The Court also rejected the contention that the city needed to show the state had compelled it to act. Id. at 45, 105 S.Ct. 1713; see also So. Motor Carriers Rate Conf., Inc. v. United States, 471 U.S. 48, 58, 105 S.Ct. 1721, 85 L.Ed.2d 36 (1985) (The Midcal test does not expressly provide that the actions of a private party must be compelled by a State in order to be protected from the federal antitrust laws.) (emphasis added). In contrast, Plaintiffs here rely principally on one of our previous decisions, Columbia Steel Casting Co., Inc. v. Portland Gen. Electric Co., 111 F.3d 1427 (9th Cir.1997). In Columbia Steel, two utility companies agreed not to compete with each other in providing service within certain territories, and argued that the Oregon Public Utilities Commission (OPUC) had authorized their non-competitive conduct when it previously approved a property exchange, rendering them eligible for state-action immunity. Id. at 1433-36. We held that the companies' actions did not qualify for state action immunity because the OPUC did not specifically and clearly authorize[ ] by the relevant statutory process their anticompetitive conduct. Id. at 1441 (citation omitted). Reasoning that when OPUC approved the property exchange, it acted only pursuant to its authority to approve sales and leases, and not pursuant to statutes giving it the authority to displace competition, we determined OPUC did not clearly articulate a state policy to displace competition. Id. at 1437. Indeed, the City of Portland had specifically considered and declined to approve the establishment of exclusive territories for the utilities, and the OPUC-approved agreement purported to comply with and implement the city's decision. Id. at 1433-34. In addressing the companies' argument that their conduct was a foreseeable result of OPUC's property-exchange approval, we held that foreseeability could not be substituted for Midcal 's clear articulation requirement. Id. at 1443. However, Plaintiffs attempt to read this statement a bit too broadly, for in Columbia Steel we also indicated that foreseeability would apply in a situation in which anticompetitive conduct was `authorized, but not compelled.' Id. at 1444 (quoting Town of Hallie, 471 U.S. at 36, 105 S.Ct. 1713) (emphasis removed). In those situations, the foreseeability approach is used to determine the reach of the antitrust immunity (since not every action by a state actor will necessarily be immune). See id. at 1443 (citing Medic Air Corp. v. Air Ambulance Auth., 843 F.2d 1187, 1189 (9th Cir.1988)). Thus, Columbia Steel did not reject a foreseeability test, but clarified when it is applicable. See Redwood Empire Life Support v. County of Sonoma, 190 F.3d 949, 955 (9th Cir.1999) (applying logical and foreseeable result test post- Columbia Steel ). [3] Thus, in light of these precedents, the standard to apply in analyzing whether the CTTC's alleged conduct was pursuant to a clearly articulated state policy is to examine whether the agency acted pursuant to its statutory authority, and, if so, whether the anticompetitive conduct was foreseeable given that statutory authorization.