Opinion ID: 2460248
Heading Depth: 2
Heading Rank: 4

Heading: the district court properly dismissed defendants' antitrust counterclaims because the city's alleged anticompetitive activities are exempt from the utah antitrust act

Text: ¶ 59 Big Ditch and the Shareholders contend that the district court erred in dismissing their antitrust counterclaims. They each raise several issues, but we need address only one: whether the district court erred in concluding that the City's alleged anticompetitive activities are exempt from the Utah Antitrust Act. ¶ 60 The Utah Antitrust Act defines anticompetitive activities as follows: (1) Every contract, combination in the form of trust or otherwise, or conspiracy in restraint of trade or commerce is declared to be illegal. (2) It shall be unlawful for any person to monopolize, or attempt to monopolize, or combine or conspire with any other person or persons to monopolize, any part of trade or commerce. UTAH CODE ANN. § 76-10-914 (2008). ¶ 61 Section 76-10-915 exempts from this definition the activities of a municipality to the extent authorized or directed by state law. Id. § 76-10-915(1)(f). [14] When construing the provisions of the Utah Antitrust Act, we look to interpretations given by the federal courts to comparable federal antitrust statutes and by other state courts to comparable state antitrust statutes. Id. § 76-10-926. ¶ 62 We construed the municipal status exemption of section 76-10-915 in Summit Water Distribution Company v. Summit County, 2005 UT 73, 123 P.3d 437. After surveying relevant federal precedent, we identified the range of state authorization that suffices to immunize anticompetitive municipal actions from antitrust laws. Id. At one end of the spectrum, we noted that a municipality need not show `a specific, detailed legislative authorization' to engage in the particular anticompetitive conduct at issue in order for the exemption to apply. Id. ¶ 39 (quoting City of Lafayette, La. v. La. Power & Light Co., 435 U.S. 389, 415, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978)). On the other end of the spectrum, we noted that the exemption will not apply where [a] state . . . allows its municipalities to do as they please, because in such circumstances the state can hardly be said to have contemplated the specific anticompetitive actions for which municipal liability is sought. Id. (internal quotation marks omitted). Out of this range of conduct, we concluded that the exemption applies when the alleged anticompetitive conduct is a `foreseeable result' of the authority granted the municipality under state law. Id. ¶ 40. ¶ 63 Here, it is undisputed that the City is a municipality. Thus, the question is whether the City's alleged monopoly over the Big Cottonwood Creek water market and other related anticompetitive activities are the foreseeable result of the authority granted the City under state law. The Legislature has expressly granted Utah municipalities authority to acquire, purchase or condemn any water, waterworks system, water supply or property connected therewith. UTAH CODE ANN. § 10-7-4(1) (Supp.2010). In addition, municipalities may purchase corporate stock of irrigation companies and are authorized to take the necessary steps to bring the land owned or controlled by an irrigation company within any conservation or conservancy district formed by the municipality. Id. § 73-1-19 (1989). A municipality may not sell water rights, UTAH CONST. art. XI, § 6, but it may market surplus water to persons or entities located outside of its boundaries. UTAH CODE ANN. § 10-8-14(1)(d) (2007); see also Cnty. Water Sys., Inc. v. Salt Lake City, 3 Utah 2d 46, 278 P.2d 285, 290-91 (1954). ¶ 64 This statutory framework evinces a state policy of displacing competition with regulation in the area of municipal control over water and water rights. The Legislature has contemplated municipalities having broad authority to invest in and manage their water systems so as to ensure their ability to furnish current and future residents with sufficient water. And the Legislature has not limited how much water a municipality may acquire, nor has it placed any geographical limitations upon the area in which the municipality may operate its water system. Against this backdrop, we have little trouble concluding that the City's alleged monopoly over the Big Cottonwood Creek water market and other alleged related anticompetitive activities are a foreseeable result of the authority granted the City by the state. We therefore conclude that the district court properly dismissed the antitrust counterclaims. ¶ 65 The district court properly applied the municipal status statutory defense to dismiss the antitrust counterclaims. This holding moots Big Ditch and the Shareholders' remaining arguments regarding the dismissal of the antitrust claims. [15] We therefore need not, and do not, reach these arguments.