Opinion ID: 476344
Heading Depth: 2
Heading Rank: 4

Heading: The Local Government Antitrust Act of 1984

Text: 63 The second question before the Court is whether the plaintiffs' claims for damages, interest on damages, costs and attorney's fees against the cities should, in the alternative, be dismissed under Sec. 3 of the Local Government Antitrust Act of 1984, Pub.L. No. 98-544, 98 Stat. 2750 (Oct. 24, 1984) (to be codified in 15 U.S.C. Sec. 35), which provides: 64 (a) No damages, interest on damages, costs or attorney's fees may be recovered under section 4, 4A, or 4C of the Clayton Act (15 U.S.C. 15, 15a, or 15c) from any local government, or official or employee thereof acting in an official capacity. 65 (b) Subsection (a) shall not apply to cases commenced before the effective date of this Act unless the defendant establishes and the court determines, in light of all the circumstances, including the stage of litigation and the availability of alternative relief under the Clayton Act, that it would be inequitable not to apply this subsection to a pending case. In consideration of this section, existence of a jury verdict, district court judgment, or any stage of litigation subsequent thereto, shall be deemed to be prima facie evidence that subsection (a) shall not apply. 66 Section 3(b) of the Act was a compromise between those Congressmen who thought that retroactive application was not in accord with Congress' traditional approach to changing existing law and those who felt that denial of retroactive application would unjustly penalize those localities that were defendants in pending suits for treble damages. Jefferson Disposal Co. v. Parish of Jefferson, 603 F.Supp. 1125, 1131 (E.D.La.1985). 67 There is no dispute that these cases were commenced before the effective date of the act and that the cities of Dallas, Fort Worth, Grapevine and Irving are local governments within the meaning of Sec. 2(1)(A) of the Act, 15 U.S.C. Sec. 34(1)(A). The question, then, is whether it would be inequitable not to apply Sec. 3(a) retroactively on the facts of these cases. 68 The Joint Explanatory Statement of the Conference Committee, which accompanied the Conference Report on the Bill, discusses the application of the Act to pending cases: 69 The application to pending cases of the money damage protection afforded by Sec. 3 will be based upon a case-by-case determination by the district court. The local government has the burden of proof to establish to the court's satisfaction that it would be inequitable not to apply this Act to the pending case. The court is to consider all relevant circumstances. The statute mentions two of the factors that the court should consider--stage of litigation and the availability of alternative relief under the Clayton Act. Where a pending case is in an early stage of litigation and where injunctive relief can remedy the problem, the defendant local government may be able more easily to sustain its burden. Where a case is in more advanced stages of litigation or where injunctive relief is unavailable or incomplete, the burden would become more difficult. If a case has progressed to or beyond a jury verdict or district court judgment, a local government defendant would need compelling equities on its side to justify the application of this section to the pending case. 70 Conference Report of H.R. 6027, 98th Cong., 2d Sess., 130 Cong.Rec. H11,850-51 (daily ed. Oct. 10, 1984). This Statement makes clear that as either of the two factors specifically mentioned in Sec. 3(b) of the Act (stage of litigation and availability of alternative relief under the Clayton Act) moves towards weighing against retroactive application, the defendant's burden to establish that denial of such application would be inequitable becomes more difficult. Jefferson Disposal, 603 F.Supp. at 1132. 71 In addition to the two factors listed in the statute--the stage of the litigation and the availability of alternative relief under the Clayton Act--the legislative history indicates that the Court should expressly consider at least three other factors in deciding the equity question: 72 In making its determination as to whether a local government should be protected against damages in a currently pending case, however, the statement of managers specifically directs the court to consider all relevant circumstances, including the stage of litigation and the availability of alternative relief under the Clayton Act--that is, the injunction remedy. But public policy requires that the court's inquiry in such instances must not be limited solely to antitrust considerations in cases brought against local governments. Among the other relevant factors, the court should properly consider: 73 First, whether the local government was acting within its normal legislative, regulatory, executive, administrative, or judicial authority; 74 [S]econd, the financial harm which a treble damage award could inflict on the municipality and its taxpayers; and 75 [T]hird, whether the municipal action was predicated on or in furtherance of Federal or State laws, policies or regulations. 76 130 Cong.Rec. H12,187 (daily ed. Oct. 11, 1984) (remarks of Rep. Fish). Accord, id. at H12,184 (remarks of Rep. Lungren). But see id. at S14,368 (remarks of Sen. Metzenbaum), reprinted in Miami International Realty Co. v. Town of Mt. Crested Butte, 607 F.Supp. 448, 452 n. 2 (D.Colo.1985) (additional factors suggested on the House floor do not reflect Congressional intent). The Court will consider the statutory factors first, then those suggested by the legislative debates. 77 The Stage of Litigation. This litigation is now seven years old, but chronological age is deceptive in this instance. These suits were filed in May and June of 1978. The initial motions to dismiss were filed on November 29, 1978. Discovery then went forward on the class certification issues, and on the merits from February, 1979, forward. The class certification hearing was held on October 1979. The Court's ruling on class certification was issued December 31, 1980. Both cases were essentially dormant during the period the Court had the class certification issues under advisement. 78 The December 31, 1980, Order also denied the motion to intervene in the Campisi (Woolen ) suit, which had been filed by some of the Whorton plaintiffs. Those plaintiffs appealed in January 1981. The Fifth Circuit's opinion was issued on August 30, 1982. The mandate was filed in the district court on September 27, 1982. No proceedings, other than those related to the appeal, took place during the pendency of the appeal. 79 After this case was remanded, the Campisi plaintiffs moved to modify the class certification order to certify a damages class and the Whorton plaintiffs moved to decertify the class. All parties filed statements concerning the future course this litigation should take. In the ensuing 2 1/2 years, though, no party has made any real effort to complete discovery and ready the case for trial on the merits. 80 The past 5 1/2 years has not been devoted to preparation for trial on the merits. Completion of pretrial discovery would take at least another year. Because the status of these actions has not changed since the effective date of the Act, the Court need not determine whether the appropriate date for assessing the stage of the litigation is the date of this Opinion or the date the Act took effect, September 24, 1984--30 days before its date of enactment under Sec. 6 of the Act. See Jefferson Disposal, 603 F.Supp. at 1132 n. 16. 81 The failure to complete pretrial discovery before the effective date of the Act is a significant indication that Sec. 3(a) should be applied retroactively. See 130 Cong.Rec. H12,186 (daily ed. Oct. 11, 1984) (remarks of Rep. Hyde) (the fact that pretrial discovery has not been completed is an important distinction between the first and second sentences of section 3(b) for purposes of retroactive application); id. at H12,187 (remarks of Rep. Rodino) (uncompleted pretrial discovery is the essential difference made in the conference report between pending cases generally, and pending cases where a jury verdict or district court decision has been rendered.) Congressman Hyde and Rodino were floor managers for the Act. Their statements during the course of debate are particularly useful in determining Congress' intent. Miami International Realty, 607 F.Supp. at 452 n. 2. The failure to complete discovery before the effective date of the Act has particular weight where, as here, major discovery remains to be conducted. 82 The Availability of Alternative Relief Under the Clayton Act. [I]n looking to the availability of alternative relief under the Clayton Act, the court would assess whether a plaintiff could recover damages from a private party and whether an injunction would be sufficient to halt continuing injury caused by an ongoing antitrust violation. 130 Cong.Rec. S13,105 (daily ed. Oct. 4, 1984) (remarks of Sen. Cranston). Contra Miami International Realty, 607 F.Supp. at 454 (the potential damage liability of other defendants should not enter into the calculus used in determining whether to apply Sec. 3 to pending cases). 83 Both criteria are met in these cases. 2 Each case has three defendants which are not local governments--Surtran Taxicabs, Yellow Cab of Dallas, and Fort Worth Cab & Baggage Co.--and which could be held liable for money damages, if not otherwise exempt from the antitrust laws. 84 Any continuing injury could be halted with injunctive relief prohibiting the cities from excluding the plaintiffs from the outbound taxicab market at the airport, or other appropriate prohibitions. Injunctive remedies under Sec. 16 [of the Clayton Act] may be as broad as necessary to ensure that 'threatened loss or damage' does not materialize or that prior violations do not recur. International Telephone & Telegraph Corp. v. General Telephone & Electronics Corp., 518 F.2d 913, 925 (9th Cir.1975). 85 Exercise of Normal Regulatory Authority & Action in Furtherance of State Law. As discussed in Part I of this Opinion, the cities were plainly exercising their normal regulatory authority and acting in furtherance of state law in their implementation of taxicab service at the airport. 86 Financial Harm of a Treble Damages Award. The combined actions seek actual damages of $7,000,000, which would be trebled to $21,000,000. Such an award inevitably would have an adverse impact even on these major cities, but they would not be crippled in their provision of services or forced into bankruptcy. The burden would also be shared by the three nonmunicipal defendants. The magnitude of any adverse consequences falls far short of those suggested as benchmarks in the House: 87 [W]hether an adverse impact would be felt by the unit of local government and its residents because of the antitrust damage award ... is important because certainly we do not want the antitrust laws of our country to result in insolvency with respect to our local governments, nor to intrude in such a way on local government that we do not have people coming forth to serve on local government out of fear of potential antitrust suits. 88 130 Cong.Rec. H12,184 (daily ed. Oct. 11, 1984) (remarks of Rep. Lungren). At the same time, [i]t cannot be denied that a judgment of that magnitude would have an adverse impact on any community in this country and would be totally at odds with the spirit and intent of the Act. Jefferson Disposal, 603 F.Supp. at 1135. 89 Conclusion. The Court determines, in light of all the circumstances, that it would be inequitable not be apply Sec. 3(a) of the Local Government Antitrust Act of 1984, 15 U.S.C. Sec. 35(a), to this case. Plaintiffs' claims under Sec. 4 of the Clayton Act, 15 U.S.C. Sec. 15, for damages, interest on damages, costs, and attorney's fees against the Cities of Dallas, Fort Worth, Grapevine and Irving are dismissed on this additional ground. This dismissal does not affect Plaintiffs' claims for costs and attorney's fees under Sec. 16 of the Clayton Act, 15 U.S.C. Sec. 26, as the Act does not encompass them. Jefferson Disposal, 603 F.Supp. at 1133 n. 19. 90 Under the express language of Sec. 4(b) of the Act, the relief provided to private litigants is not available to the private defendants in these actions because they were commenced before the effective date of the Act.