Opinion ID: 476344
Heading Depth: 2
Heading Rank: 1

Heading: The State Action Exemption

Text: 18 In Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), the Supreme Court, relying on principles of federalism and state sovereignty, determined that the Sherman Act does not apply to the anticompetitive conduct of a state acting through its legislature. Id. at 350-51, 63 S.Ct. at 313. Thirty-five years later, the Court also held that municipalities are not beyond the reach of the antitrust laws by virtue of their status because they are not themselves sovereign. City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 412, 98 S.Ct. 1123, 1136, 55 L.Ed.2d 364 (1978). These actions were filed shortly after City of Lafayette was decided. 19 City of Lafayette did not completely prohibit municipalities from claiming the state action exemption. Instead, the plurality opinion suggested that the state action doctrine exempts only anticompetitive conduct engaged in as an act of government ... [by a political subdivision of the state] pursuant to state policy to displace competition with regulation or monopoly public service. 435 U.S. at 413, 98 S.Ct. at 1136. The opinion went on to explain: 20 This does not mean, however, that a political subdivision necessarily must be able to point to a specific, detailed legislative authorization before it properly may assert a Parker defense ... [A]n adequate state mandate foranticompetitive activities ... exists when it is found from the authority given a governmental entity to operate in a particular area, that the legislature contemplated that kind of action complained of. 21 435 U.S. at 419, 98 S.Ct. at 1139 (citation omitted). Finally, City of Lafayette suggested, without deciding the issue, that it would be sufficient to obtain Parker immunity for a municipality to show that it acted pursuant to a 'clearly articulated and affirmatively expressed ... state policy' that was 'actively supervised' by the State. Town of Hallie, 105 S.Ct. at 1717, quoting City of Lafayette, 435 U.S. at 410, 98 S.Ct. at 1135. 22 Considerable debate ensued over what would constitute an adequate articulation and expression of state policy, and what would constitute active supervision. In Community Communications Co. v. City of Boulder, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982), the Court held that a home rule provision of the Colorado Constitution which allocated only the most general authority to municipalities to govern local affairs did not satisfy the clear articulation component of the state action test. The opinion also suggested that whether active supervision by the state of the anticompetitive conduct was required was an open question, despite the plurality opinion in City of Lafayette. 455 U.S. at 51-52, n. 14, 102 S.Ct. at 840-841, n. 14. 23 Noting that [i]t is fair to say that our cases have not been entirely clear, 105 S.Ct. at 1720, the Court resolved much of the debate in Town of Hallie. A unanimous Court reiterated that the state action exemption applies whenever the state legislature has clearly articulated and affirmatively expressed a state policy to displace competition in the regulated area. Id. at 1719. The Court further held that although compulsion affirmatively expressed may be the best evidence of state policy, it is by no means a prerequisite to a finding that a municipality acted pursuant to a clearly articulated state policy. Id. Finally, the Court concluded that the active state supervision requirement should not be imposed in cases in which the actor is a municipality. Id. 24 The Fifth Circuit has applied Town of Hallie in a case which is virtually indistinguishable from the instant actions. In Independent Taxicab Drivers' Employees v. Greater Houston Transportation Co., 760 F.2d 607 (5th Cir.1985), the City of Houston had entered into a contract with the Greater Houston Transportation Corporation by which the City granted an exclusive concession over passenger service at Houston Intercontinental Airport. Two groups of taxicab owners and operators filed suit under the Sherman and Clayton Acts, seeking damages and injunctive relief from the City and its private contractor. The district court dismissed the complaint on defendants' motion for summary judgment, holding that the City was immune from antitrust scrutiny under the state action exemption and that the private contractor was immune under the Noerr-Pennington doctrine. The Fifth Circuit affirmed. 25 The Court's analysis focused on the relevant provision of the Texas Municipal Airport Act, which authorizes municipalities to establish and operate airports both within and without their boundaries. Article 46d-4 provides: 26 (a) In operating an airport ... such municipality may ... enter into contracts ... and other arrangement for a term not exceeding forty (40) years with any persons: 27