Court Opinion

ID: 2962011
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:51:16.815729+00
Date Added: 2024-06-11T11:42:24.242485
License: Public Domain

USCA1 Opinion

	

                                       UNITED STATES COURT OF APPEALS
                            UNITED STATES COURT OF APPEALS                                FOR THE FIRST CIRCUIT
                                FOR THE FIRST CIRCUIT                                 ____________________        No. 92-2218                           TRI-STATE RUBBISH, INC., ET AL.,                               Plaintiffs, Appellants,                                          v.                           WASTE MANAGEMENT, INC., ET AL.,                                Defendants, Appellees.                                 ____________________                     APPEAL FROM THE UNITED STATES DISTRICT COURT                              FOR THE DISTRICT OF MAINE                       [Hon. Gene Carter, U.S. District Judge]
                                          ___________________                                 ____________________                                        Before                                 Breyer, Chief Judge,
                                         ___________                        Torruella and Boudin, Circuit Judges.
                                              ______________                                 ____________________            Ralph A. Dyer for appellants.
            _____________            Michael A. Nelson with  whom Emily A. Bloch, Nicholas S. Nadzo and
            _________________            ______________  _________________        Jensen  Baird Gardner  & Henry  were on  brief for  appellee Mid-Maine
        ______________________________        Waste Action Corp.            Robert S.  Frank with whom  Carl E. Kandutsch  and Verrill &  Dana
            ________________            _________________      _______________        were on brief  for appellees Waste Management,  Inc., Waste Management        of Maine,  Inc., Consolidated  Waste Services,  Inc. and  Consolidated        Waste Transport, Inc.            John  J. Wall,  III with  whom Thomas  F. Monaghan  and  Monaghan,
            ___________________            ___________________       _________        Leahy, Hochadel & Libby were on brief for appellee City of Auburn.
        _____ _________________                                 ____________________                                    July 13, 1993                                 ____________________

                 BOUDIN,  Circuit  Judge.   The  complaint  in  this case
                          ______________            charged that a  number of entities, public  and private, were            seeking  to  monopolize  the  waste  disposal   business  and            otherwise acting in violation of  federal and state law.  The            district court dismissed the complaint for failure to state a            claim.  We affirm the district court with one  exception:  as            to the predation claims against the private defendants, we do            not think  that state  action immunity has  been made  out on            this  record, and therefore  remand those claims  for further            proceedings.                                  I.  THE BACKGROUND                 This case  is one  of several in  which state  and local            communities  have taken  measures to  cope  with their  waste            collection responsibilities,  and private  haulers have  been            adversely affected and  responded with antitrust suits.   The            cases vary,  and in this one  the history is tangled  and the            claims  numerous.    In describing  the  facts,  we  take the            allegations  of  the complaint  as true,  as is  customary in            reviewing dismissals  for  failure to  state  a claim.    See
                                                                      ___            Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993).
            _________    ____                 Maine  has in force statutes that give local communities            substantial  authority   over  local  waste   collection  and            disposal.    Under  this legislative  umbrella,  the  City of            Auburn and eleven  other municipalities formed in 1986 a non-            profit, non-stock  corporation to assist  in waste  disposal.                                         -2-
                                         -2-

            The entity--Mid-Maine Waste Action Corporation ("MMWAC")--was            then mandated to construct a facility to burn municipal waste            and derive electricity from the process.  Maine law expressly            authorizes  municipalities to  cooperate  in   waste disposal            projects, Me. Rev.  Stat. Ann. tit. 38,    2201, and provides            for interlocal agreements to  organize public waste  disposal            corporations to own or operate facilities.  Id.   1304-B(5).
                                                        __                 MMWAC issued  over $42 million  in bonds to  construct a            waste-to-energy  facility.   The  bonds  were  to  be  funded            through  so-called  "tipping  fees," customarily  charged  to            those who  dispose of waste  at a landfill or  other disposal            facility,  and  through the  revenues  from the  sale  of the            electricity.   To  secure  the quantity  of  waste needed  to            operate  the  facility  economically--that   is,  at  a  high            percentage of its capacity--the  MMWAC municipalities enacted            flow control ordinances.  These local laws, authorized by Me.            Rev. Stat. Ann. tit.  38,   1304-B(2), required the  delivery            of  all solid  waste generated  within  each municipality  to            MMWAC.    Each  municipality also  contracted  with  MMWAC to            deliver to  it the  solid waste  generated in  the community,            paying MMWAC  whatever tipping  fee was  required to  produce            revenues to service its debt.                  Because the  MMWAC incinerator-generator  facility would            not be ready before 1992,  MMWAC provided in the meantime for            an alternative method of disposing of the  waste it received.                                         -3-
                                         -3-

            For  this interim period,  MMWAC contracted with  two related            entities, Consolidated Waste Services and Consolidated  Waste            Transportation (collectively,  "the Consolidated  companies")            to operate  a transfer  station near  the MMWAC  construction            site.   A  transfer station  is a  collection point  at which            waste may be processed or repackaged before being sent to its            final  destination.   MMWAC agreed  to  pay the  Consolidated            companies $66 per  ton to receive the waste  delivered and to            dispose of the waste until the MMWAC incinerator was ready to            operate.                   MMWAC's initial tipping fee was set at  $75 per ton.  It            is common in  waste collection for municipalities  to collect            residential trash themselves or to contract out this function            but  to require  commercial businesses  to contract  directly            with  private haulers  for  their  trash removal  facilities.            Under the municipalities' agreements with MMWAC and under the            local flow control  ordinances, private trash haulers  in the            twelve municipalities and the  municipalities themselves were            effectively required to  deliver their trash to  the transfer            station and pay the $75 per ton tipping fee to MMWAC.                 Waste  Management   of  Maine,  Inc.  is   an  operating            subsidiary  of Waste  Management, Inc.,  one  of the  largest            waste  collection and  disposal  firms in  the  nation.   The            operating  subsidiary  provides trash  collection  in various            Maine  towns.    In  July 1990,  after  the  transfer station                                         -4-
                                         -4-

            agreement between  MMWAC and the two  Consolidated companies,            Waste  Management,   Inc.  acquired   the  two   Consolidated            companies; and one of the two may thereafter have been merged            into  Waste  Management of  Maine.    We  refer to  all  four            companies, collectively, as "Waste Management."                 Tri-State   Rubbish,   Inc.,  a   competitor   of  Waste            Management  of Maine, is  also in the  business of collecting            and disposing of commercial  trash, including waste generated            by various  customers in  Auburn.   Its affiliate,  Recycling            Unlimited Services Corp., Inc., processes waste  and recovers            from it recyclable  commodities.  Gary Hart  is the principal            in both  businesses.  In 1990, Tri-State  Rubbish declined to            deliver to the Consolidated transfer station all of the waste            collected  by   Tri-State  Rubbish  in  Auburn.     Tri-State            Rubbish's  position was that waste capable of having recycled            commodities  extracted from it  was not covered  by the local            flow control ordinance.                 Auburn brought suit against Tri-State Rubbish in a Maine            state trial court in December 1990 to enjoin it from refusing            to deliver all  of its Auburn waste to  the transfer station.            In  July   1992,  the  court  rejected   Tri-State  Rubbish's            interpretation  of Maine  law and  granted  an injunction  in            favor of Auburn.  City  of Auburn v. Tri-State Rubbish, Inc.,
                              _______________    ______________________            No.  CV-90-561 (Me. Sup.  Ct., Androscoggin County,  July 20,                                         -5-
                                         -5-

            1992).  That case, we are told, is now on appeal to the Maine            Supreme Judicial Court.                 MMWAC's incinerator-generator  began operating  in early            1992 and almost  at once MMWAC found that  the waste produced            in the twelve  municipalities was not enough to  keep the new            facility operating  at an optimal  level.  This led  MMWAC to            seek additional waste from outside  the member towns; it  did            so  by  offering  a reduced  tipping  fee,  allegedly  $45 to            municipalities who  were not members  of MMWAC and as  low as            $28 to Waste Management of Maine for its delivery to MMWAC of            waste  collected  outside  the  twelve  communities.    These            reduced fees were not made available to Tri-State Rubbish.                 In   September   1992,  Tri-State   Rubbish,   Recycling            Unlimited, and  Hart  (collectively  "Tri-State")  began  the            present suit in  federal district court.  The defendants were            Auburn, MMWAC, and the four Waste Management companies: Waste            Management,  Inc., Waste  Management of  Maine,  and the  two            Consolidated companies.  Based on the events described above,            the  complaint asserted federal and state antitrust claims, a            claim  of tortious  interference (by  Waste  Management) with            Tri-State's contractual relations, and claimed violations (by            Auburn)  of 42  U.S.C.     1983 and  provisions  of the  U.S.            Constitution.                   The defendants in  this federal action moved  to dismiss            the complaint under  Fed. R. Civ. P. 12(b)(6)  for failure to                                         -6-
                                         -6-

            state a claim upon which relief may be granted.  The district            court  granted  the motions,  concluding  that  the antitrust            claims  were barred by so-called "state action" immunity; the            bases for dismissing  the other claims are  more conveniently            described  below as the separate claims  are discussed.  Tri-
                                                                     ____            State  Rubbish, Inc. v. Waste  Management, Inc., 803 F. Supp.
            ____________________    _______________________            451 (D. Me. 1992).  This appeal followed.1                          II.  THE FEDERAL ANTITRUST CLAIMS                 A  half century  ago the  Supreme  Court determined,  in            Parker v. Brown,  317 U.S. 341 (1943), that  Congress had not
            ______    _____            intended  the  federal  antitrust  laws  to  apply  to  trade            restraints  or  monopolies  imposed   by  state  governments.            Although the antitrust  laws aim at competitive  markets, the            Court in  Parker recognized  that governments  often restrict
                      ______            competition  for public  purposes.    The  actions  of  state            governments, no  less than  those of  the federal  government            itself, were deemed not to fall within the constraints of the            antitrust laws.                 After  a certain  amount  of  wobbling,  it  has  become            settled  that municipalities  enjoy  the  protection  of  the            Parker doctrine if,  but only if, the conduct  in question is
            ______                                
            ____________________                 1Although both sides have captioned their briefs to show            "Tri-State  Rubbish,   Inc.,  et  al."  as   the  plaintiffs-            appellants,   the  notice  of  appeal  names  only  Tri-State            Rubbish,  Inc.  as the  appellant.    Our  caption and  other            references  to  Hart  and  Recycling  Unlimited  are  without            prejudice to  any consequences that  may flow on  remand from            the way the notice of appeal was framed.                                         -7-
                                         -7-

            of  a kind  authorized or  directed  by state  law.   Town of
                                                                  _______            Hallie v. City of Eau  Claire, 471 U.S. 34 (1985); Fisichelli
            ______    ___________________                      __________            v. Town of Methuen, 956 F.2d 12  (1st Cir. 1992).  In general
               _______________            this immunity is not defeated by claims that the municipality            "conspired" with  a private party,  City of Columbia  v. Omni
                                                ________________     ____            Outdoor Advertising, Inc.,  111 S. Ct.  1344 (1991), or  that
            ________________________            the   municipality  made   some   error   under  local   law.            Fisichelli, 956 F.2d at 14.
            __________                 Count  I.    In  count  I of  its  complaint,  Tri-State
                 ________            contends that in  violation of the Sherman Act,  15 U.S.C.               1-2, Auburn and MMWAC have  sought to monopolize and restrain            trade in the waste disposal  business in Auburn and the other            eleven municipalities.  The gist  of the claim, as elaborated            in  Tri-State's brief, is simple: under the local ordinances,            all solid waste  generated in the twelve  municipalities must            be turned  over to  MMWAC or  its designee.   Thus  the waste            disposal business  in these  locations, including  recyclable            materials, is within the sway of one entity, MMWAC.                 With  a couple of caveats, Tri-State concedes that state            action  immunity is  available as  to  count I  if the  Maine            legislature  empowered  municipalities to  engross  all solid            waste including waste that might  be recycled.  But it argues            that Maine's policy is to promote the recovery  of recyclable            commodities  from  waste  before the  residue  is  burned for            electricity.  It derives this priority from  a declaration of                                         -8-
                                         -8-

            policy  in the Maine statute preceding the specific grants of            authority.  Me. Rev. Stat. Ann. tit. 38,   1302, para. 2.  It            urges  us to  read  the  Maine  legislation to  exclude  such            recyclable   waste  from   the   authorization  that   allows            municipalities to control the disposition of solid waste.                 The Maine statute explicitly  permits a municipality  to            require that "solid waste" generated within its boundaries be            delivered to "a designated disposal or reclamation facility,"            id.     1304-B(2),  reclamation  includes the  generation  of
            ___            electricity,  id.,  and  solid waste  is  defined  to include
                          ___            "useless, unwanted or discarded solid material."  Id.   1303-
                                                              __            C(29).   The statutory definition  of solid waste goes  on to            say that "[t]he fact that a solid waste or constituent of the            waste may have value or other use or may be sold or exchanged            does not exclude it from this definition."   Id.   This final
                                                         ___            clause pretty much disposes of Tri-State's argument.                 Statutes or ordinances similar to those involved in this            case exist elsewhere.   Tri-State  cites us  to several  that            have  been construed not to reach waste from which recyclable            commodities could  be extracted.   Yet the  case on  which it            principally  relies  concerned  an  authorizing statute  that            excluded recyclables.2  By  contrast, the definitional phrase
            ________                                
            ____________________                 2In Waste Management of the Desert, Inc. v. Palm Springs
                     ___________________________________     ____________            Recycling Center,  Inc., 11  Cal. Rptr. 2d  676 (Cal.  App.),
            ______________________            petition for review  granted, 13 Cal. Rptr. 2d  850, 840 F.2d
            ____________________________            955  (1992), the  California statute  reserved  the right  of            anyone "to  donate, sell or  otherwise dispose of his  or her                                         -9-
                                         -9-

            in  the  Maine  statute  (quoted  at  the  end  of  the  last            paragraph) explicitly includes recyclables in  the waste that            is  subject to  municipal  control.    The  district  court's            reading of the Maine statute  follows its plain language, 803            F. Supp. at  456, and comports with the reading  of the Maine            state court in the injunction action against Tri-State.  City
                                                                     ____            of Auburn,  supra.  We see  no error in  the district court's
            _________   _____            interpretation.                 Tri-State also objects  to the  district court's  ruling            that  MMWAC should  be treated  as  a municipality  for state            action purposes.  As a private actor, Tri-State argues, MMWAC            must show that it is subject to state supervision pursuant to            California Retail  Liquor Dealers  Ass'n v. Midcal  Aluminum,
            ________________________________________    _________________            Inc.,  445 U.S. 97 (1980).   Midcal, building upon statements
            ___                          ______            in  Parker  and later  cases,  made clear  that  state action
                ______            immunity  will extend to  private actors only  where they are            subject  to adequate  official supervision.    The state,  in            other  words, may  take  anticompetitive measures  itself  or            authorize its municipalities to do so; but it may not license            private restraints  unless the private parties are themselves
            _______            regulated.                 Passing the  question whether the conduct  challenged in            count I is that of  MMWAC (as opposed to the municipalities),                                
            ____________________            recyclable  materials" and of any private company to contract            with a private  waste hauler to remove  segregated recyclable            materials.  11 Cal. Rptr. at 683-84.                                         -10-
                                         -10-

            we think that  MMWAC's status is that of  the municipalities.            MMWAC's  mission,  waste disposal,  is  a  traditional local-            government  function.  By  statute MMWAC's directors  must be            elected by  municipal officers and  are themselves  municipal            officers. Me. Rev. Stat. Ann. tit. 38,   1304-B(5).  The full            faith and credit of the  municipalities may be pledged in aid            of its  operations.  Id.   Patently MMWAC is  the creature of
                                 __            its  member  municipalities  and enjoys  their  status.   See
                                                                      ___            Interface Group, Inc.  v. Massachusetts  Port Authority,  816
            ____________________      _____________________________            F.2d 9, 13 (1st Cir. 1987).3                 Counts II, III  and III-A.  These  counts, which include
                 _________________________            Tri-State's  remaining  federal antitrust  claims,  present a            different  set  of  issues.   In  count  II  Tri-State  first            challenged   as   a   restraint  of   trade   and   attempted            monopolization   the   agreement   between   MMWAC  and   the            Consolidated  companies.   As a  consequence  of the  interim            arrangements,   Tri-State  argues that  Waste  Management  of            Maine was able  to offer "predatory"  prices to customers  in            Auburn  and other MMWAC municipalities.  In Tri-State's view,            the  $66  per  ton  payment  by  MMWAC  to  the  Consolidated            companies  for disposing of the waste allowed their affiliate                                
            ____________________                 3The   only  participants  named  in  count  I  are  the            municipalities  and MMWAC.  Since their conduct is authorized            by  statute, the state action doctrine  applies.  Contrary to            Tri-State's     claim,      municipalities     (or      their            instrumentalities)  engaged in  state-authorized conduct  are            not  themselves  required  to be  further  supervised  by the            state.  See Town of Hallie, 471 U.S. at 47.
                    ___ ______________                                         -11-
                                         -11-

            Waste Management of  Maine effectively to reduce its  $75 per            ton tipping fee to $9 ($75 less $66) and thus steal away Tri-            State's customers.4                 Counts III  and III-A  concern the  activities of  Waste            Management of  Maine in  other non-MMWAC  communities.   This            competitor, says Tri-State,  has been favored by MMWAC with a            low  tipping fee ($24  per ton), not  available to Tri-State,            for  "foreign"   waste  delivered  from  outside   the  MMWAC            municipalities  to  the  new  incinerator-generator.5   As  a            result,  Tri-State  has  lost  customers  outside the  twelve            municipalities  to "low ball" prices.  Further, the customers            are "lock[ed] up" by exclusive dealing contracts and supplied            with  trash  containers  that  can be  used  only  for  Waste            Management trash.                 In   analyzing   these   claims,   the  district   court            distinguished   between  MMWAC   and  the   Waste  Management            companies.  As to the former, the court pointed  out that the            participating  municipalities  were  empowered  by the  Maine                                
            ____________________                 4Tri-State's assertion of a $9 per ton "net" tipping fee            appears to be faulty  economics.  The $66 per ton  payment to            the Consolidated companies was to cover the cost of receiving            and disposing of the  waste.  Whether or not the  cost to the
                                                              ____            Consolidated companies  was actually $66  per ton, it  is not            likely to have been zero.                 5The record does not explain why, given MMWAC's need for            fuel, it would make sense for MMWAC to offer the  $24 tipping            fee  exclusively  to Waste  Management  of Maine.    While we            accept the allegation as true for purposes of this appeal, we            note that MMWAC's brief denies that this is what happened.                                         -12-
                                         -12-

            statute to control completely  the collection and disposition            of  waste generated within their communities, dealing if they            chose to do so  with a single entity.   803 F. Supp. at  458;            Me. Rev.  Stat. Ann.  tit. 38,    1304-B(4).   Thus, assuming            that  MMWAC's  interim  arrangements  with  the  Consolidated            companies favored  the Waste  Management companies over  Tri-            State, MMWAC was protected by the state action doctrine.                   As to the conduct in  Counts III and III-A, the district            court noted that  the Maine legislature clearly  contemplated            that municipalities could buy waste from other municipalities            to  make up  any shortfall.   803 F.  Supp. at 459;  Me. Rev.            Stat. Ann. tit. 38,    1304-B(4-A)(B).  A reduced tipping fee            is merely one  way of  "buying" such waste.   Nothing in  the            authorizing statute says that the same price must  be offered            to  everyone; on  the contrary  the need  for  long-term fuel            commitments,  recognized  elsewhere in  the statute,  see Me.
                                                                  ___            Rev.  Stat.  Ann.   tit.  38,     1304-B(4),   suggests  that            arrangements  with one  or  a  few  suppliers  were  entirely            foreseeable.  We  agree with the district court  that MMWAC's            alleged  exclusive offer  of  the $24  tipping  fee to  Waste            Management  of  Maine  for foreign  waste  was  authorized by            statute and is protected by the state action doctrine.                 A different, and  more difficult, issue is  presented by            Waste  Management's claim  that it  too is  protected  by the            state  action   doctrine.    Tri-State   objects  that  Waste                                         -13-
                                         -13-

            Management,   at  least,  is  fully  subject  to  the  Midcal
                                                                   ______            requirement that it  be supervised before any  of its actions            can be protected.  The district court agreed that supervision            is  required.   But it  found that  municipal, as  opposed to            state, supervision is sufficient.  It further held  that this            obligation was satisfied by MMWAC's obligation, undertaken in            its contracts with  its municipality members, to  comply with            all pertinent laws.  803 F. Supp. at 461.                 We  agree with the  district court's view,  supported by            the  greater weight of  authority, that municipal supervision            of private actors is adequate where authorized by or implicit            in the  state legislation.  Although there  is some precedent            to  the contrary,6 we share the view  of the Eighth and Ninth            Circuits, endorsed  by the  leading antitrust  treatise, that            municipal  supervision is  adequate.7   As Professors  Areeda            and Hovenkamp note,  "it would be implausible to  rule that a            city may regulate, say, taxi rates but only if a state agency            also  supervises the private taxi operators."  Antitrust Law,
                                                           _____________            supra n.7, at 197.
            _____                                
            ____________________                 6See,  e.g.,  Riverview   Investments,  Inc.  v.  Ottawa
                  ___   ____   _____________________________       ______            Community Improvement Corp., 774 F.2d 162 (6th Cir. 1985).
            __________________________                 7Gold Cross Ambulance & Transfer v. City of Kansas City,
                  _______________________________    ___________________            705 F.2d  1005 (8th Cir.  1983), cert. denied, 471  U.S. 1003
                                             ____  ______            (1985); Tom Hudson & Assocs. v. City of Chula Vista, 746 F.2d
                    ___________________     ___________________            1370 (9th  Cir. 1984),  cert. denied, 472  U.S. 1028  (1985);
                                    ____  ______            Savage  v. Waste Management, Inc.,  623 F. Supp. 1505 (D.S.C.
            ______     _____________________            1985); see  also P.  Areeda & H.  Hovenkamp, Antitrust  Law  
                   ___  ____                             ______________            212.7c at 196-97 (Supp. 1992).                                         -14-
                                         -14-

                 At  this  point,  our  analysis  of  Waste  Management's            position diverges somewhat  from that of the  district court.            As  to any  claim that  Waste  Management received  favorable            tipping   fees--whether  through   MMWAC   payments  to   the            Consolidated  companies or  outright as to  foreign waste--we            think  "supervision" is not a  requirement at all: the choice            to make such payments was  that of MMWAC and its  actions are            protected as state action.  To treat the mere receipt of such            authorized payments as  wrongful would  undermine the  Parker
                                                                   ______            protection  afforded MMWAC  and mistake  the  purpose of  the            supervision requirement, which is to prevent the  unregulated            licensing of private anticompetitive conduct.
                         _______                 This analysis disposes of the claims under counts II and            III  against  all  parties  including  the  Waste  Management            defendants,  so far  as  those  claims  attack  the  official            actions  of  MMWAC:    the  contract  between MMWAC  and  the            Consolidated companies,  the  payments  to  the  Consolidated            companies by  MMWAC, and  the tipping fees  set by  MMWAC for            Waste  Management  of  Maine, whether  for  local  or foreign            waste.  It does not,  however, resolve the attacks, scattered            throughout counts  II, III, and III-A against  the conduct of            Waste Management of Maine vis-a-vis its own customers.  These            attacks  charge  Waste  Management  of Maine  with  predatory            pricing of its waste collection services,  wrongful exclusive                                         -15-
                                         -15-

            dealing by long-term  contracts, and unreasonably restricting            the use of the containers it furnished.8                 The Predation Claims.  The district court held that  the
                 ____________________            Waste  Management  defendants  were  protected  as  to  their            customer-related  conduct under  the  state action  doctrine.            The   court  reasoned  that   by  its  agreements   with  the            municipalities, MMWAC had  committed itself to obey  the law;            that Waste  Management of Maine had  contractual arrangements            with  MMWAC;  and that  this  contractual  authority provided            sufficient  municipal  supervision  to  cast  the garment  of            Parker  protection  over  Waste  Management  of  Maine's  own
            ______            conduct.   803 F.  Supp. at 461.   The district  court noted,            however, that the contracts had not been made available to it            for inspection.  Id.  We are not persuaded that the rates and
                             __            contract terms  Waste Management  set for  its own  customers            have been brought within Parker.
                                     ______                 There is simply nothing to which we have been pointed to            show that MMWAC has claimed or exercised any control whatever            over the rates that Waste  Management of Maine charges to its            customers or the other terms  (such as length of contract) on            which it  deals.   While it is  conceivable (but  not proved)                                
            ____________________                 8MMWAC is also  charged in these counts  but, apart from            bare  references to  conspiracy,  there  is  nothing  in  the            complaint  to connect  MMWAC with Waste  Management's actions            vis-a-vis  its  own customers  except  the  favorable tipping            fees.   Since the fee  payments are state  action, we do  not            think that any  claim has been stated against  MMWAC based on            Waste Management's alleged predation.                                         -16-
                                         -16-

            that MMWAC  claims such  authority with  respect to  customer            contracts  in the  MMWAC communities,  it  is certainly  less            likely that it does so in the non-MMWAC communities which are            the locales for the predation  alleged in counts III and III-            A.    Absent  a  showing  of  control,  questions   of  state            authorization and the adequacy  of official supervision  need            not even be reached.                 It is a close question whether the judgment of dismissal            should  nevertheless  be affirmed  on an  alternative ground,            namely, that the allegations of the complaint fail to state a            predation claim even if the state action doctrine is ignored.            This alternative course is urged by Waste Management, and  we            have  given it  serious consideration.    The requisites  for            proving  predatory   pricing  are   demanding,  because   the            conditions under which  it is plausible  are not common,  and            because it  can  easily be  confused with  merely low  prices            which  benefit customers.    See Barry  Wright  Corp. v.  ITT
                                         ___ ___________________      ___            Grinnell  Corp.,  724 F.2d  227 (1st  Cir. 1983).   Exclusive
            ______________            dealing contracts may also benefit customers and are unlawful            only  upon  a  particularized  showing  of  unreasonableness.            Tampa  Electric Co.  v.  Nashville  Coal  Co., 365  U.S.  320
            __________________       ___________________            (1961).                 Thus a complaint that did no more than  allege predatory            pricing or  exclusive  dealing contracts  with  nothing  more
                                                            _______            specific might well  be susceptible to dismissal  for failure                                         -17-
                                         -17-

            to state a claim.  The present complaint is, in a sense, both            better and worse.  It is somewhat more specific, asserting at            one point  that the  prices  offered by  Waste Management  of            Maine were as much as 50 percent below market rates, at other            places that the rates were sometimes below variable cost, and            that the exclusive dealing contracts were for three years.                   At  the  same  time, the  complaint  goes  some distance            toward undermining  its own  predatory pricing  claim.   Tri-            State implies that the low prices offered by Waste Management            of Maine were,  in some instances at least, the result of the            favorable tipping fees  that MMWAC made available to  it.  If            this is the  whole of the charge, then  there is no predatory            pricing claim at  all.  A company that  rationally prices its            own  product or service  at or above  its own  costs does not            violate the Sherman  Act merely because  its costs, and  thus            its prices, are lower than a  rival's costs; and this is true            even though its lower costs may be due to  the generosity, or            foolishness,  of another supplier who has charged the company            too little for an input.   See generally Brooke Group Ltd. v.
                                       _____________ ________________            Brown & Williamson  Tobacco Corp., 61 U.S.L.W.  4699, 4702-03
            ________________________________            (June 21, 1993).                 Even  apart from  this  possible  explanation for  lower            prices, Tri-State's predatory pricing claim is on the edge of            inadequacy.    Although  the  complaint  asserts  that  Waste            Management is pricing below variable cost--the normal test of                                         -18-
                                         -18-

            predation,  see Barry Wright--it  is not clear  what basis if
                        ___ ____________            any  Tri-State has  for  this assertion.    The reference  to            prices  50 percent below  customary prices might  invite some            suspicion, but in an industry like waste collection, in which            customers  are scattered along  routes, the variable  cost of            serving  additional customers  to piece  out a  route  may be            extremely low.                   The claim that  the duration of the  exclusive contracts            is unlawful is, if anything, an even thinner case on the face            of  the complaint.   That  some  of the  contracts are  three            years,  the  only  specific in  the  complaint,  might invite            curiosity,   but  it  does   not  even  begin   to  establish            illegality.  Under Tampa Electric  Co., it is the totality of
                               __________________            reasons  for   such  a  term,   and  its  actual   impact  on            competition, that are  decisive.  Here, we know nothing about            the  number   of  customers   affected,  the   size  of   any            cancellation  penalty,  the  practice  in  the  industry,  or            anything  else that  might help  to  paint a  picture of  the            competitive scene.   Of course, a plaintiff is  required only            to plead a claim, not to recite evidence, but the  essence of            a claim like this one lies in the details.                 A final concern is that predatory pricing is a section 2            claim and is condemned only where it is part of an attempt to            monopolize or is used to secure or retain an actual monopoly.            E.g.,  C.A.T. Industrial  Disposal,  Inc. v.  Browning-Ferris
            ____   _________________________________      _______________                                         -19-
                                         -19-

            Industries,  884  F.2d  209  (5th  Cir.  1989).9    Tri-State
            __________            certainly  does  allege both  the  aim  of monopoly  and  the            actuality, but its complaint supplies very little information            (e.g., market shares in a properly defined market) from which
             ____            one can frame a judgment whether this claim is plausible. The            complaint  does say  that  Waste  Management,  Inc.  and  its            subsidiaries  are the  largest  waste  handling and  disposal            business in Maine and in the nation; but the primary issue is            dominance  or  prospective dominance  in  a  properly defined            economic market.                 One's first instinct  is that monopoly would  be hard to            sustain in a business in which the basic equipment is a truck            and entry is apparently easy.  See generally United States v.
                                           _____________ _____________            Waste Management,  Inc., 743  F.2d 976 (2d  Cir. 1984).   But
            ______________________            waste collection might in theory be subject to local monopoly            in  some circumstances.  Thus, the efficiencies of collecting            from a  number of closely  located customer sites  could make            new entry difficult,  especially if the community  were small            and many customers  were tied to an existing  dominant hauler            by long-term contracts; and environmental restrictions on new            landfills in some areas could  give a decisive advantage to a                                
            ____________________                 9Exclusive  dealing, which  can be  attacked inter  alia
                                                              ___________            under section  1 of the  Sherman Act, 15  U.S.C.   1,  can be            condemned without a showing that monopoly power is present or            within reach.  But  the impact on competition is  part of the            equation and, absent  a potential monopoly or  oligopoly, the            competitive impact may be hard to establish.                                         -20-
                                         -20-

            hauler that controlled  the only available facility.    There            are some hints,  but only hints, in the  complaint that Waste            Management  of Maine  may enjoy an  advantage of  this latter            sort.                 Taking everything  together, we  think it  wiser not  to            affirm  the  dismissal   of  the  predation  claims   on  the            alternative ground.  Thin and doubtful though they may be, we            cannot  say at  this stage  that these claims  are hopelessly            inadequate if Parker's shield is removed.  The district court
                          ______            did not rest its decision on that ground, and it has been the            subject of only a small portion of the briefs on this appeal.            The  old prejudice  against summary disposition  of antitrust            claims has diminished, First National Bank v. Cities Services
                                   ___________________    _______________            Co.,  391 U.S. 253  (1968), but the grant  of a Rule 12(b)(6)
            __            motion on the predation claims  would, at least at this time,            be a shade too summary.                 We underscore the limited  nature of our remand.   These            claims  can be  stated, if  at  all, only  against the  Waste            Management  defendants.  The district court is fully entitled            to demand more specific explanations from Tri-State as to the            gray areas  in its predation claims, including  the basis for            the charge of pricing below  variable cost, the basis for the            market definitions  urged, and the  basis for any  claim that            monopoly  power exists  or could  plausibly be  secured  in a            properly defined economic market.  Nothing in this opinion is                                         -21-
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            intended  to preclude summary  disposition at a  later stage,            and this need not  mean much later if  these claims prove  to            have little substance.10                          III.  TRI-STATE'S REMAINING CLAIMS                 Count IV  of the  complaint reasserts,  under the  Maine            antitrust statute, the  federal antitrust claims made  in the            earlier  counts.  The  Maine antitrust statutes  parallel the            Sherman Act,  see Me.  Rev. Stat.  Ann. tit.  10,     1101 et
                          ___                                          __            seq., and Tri-State offers no separate argument for liability
            ___            under state law.  In point  of fact, the Maine statute  under            which MMWAC is organized also  has an explicit exemption from            state antitrust  laws for  specified  municipal contracts  or            ordinances.  Me.  Rev.  Stat.  Ann.  tit.  38,     1304-B(6).            Accordingly,  the dismissal of  the state antitrust  claim is            sustained except as to the predation claims against the Waste            Management defendants.                 In  count V, Tri-State  claims that the  solicitation of            Tri-State  customers by  Waste  Management  of  Maine  was  a            violation of Maine law against interference with advantageous            contractual   relations.      The  gravamen   is   that  this            solicitation   was   unlawful    because   achieved   through            discriminatory  tipping fees,  predatory  pricing, and  other                                
            ____________________                 10The Waste  Management  defendants  are  also  free  to            pursue their Parker defense as  to the predation claims.  Our
                         ______            holding is that on this record there is an insufficient basis            for determining that  Parker immunity exists as  to the terms
                                  ______            on which Waste Management of Maine deals with its customers.                                         -22-
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            wrongs.  The district court dismissed the count on the ground            that the  actions in  question were within  the ambit  of the            state  legislation  and  therefore  could  not  be  "wrongful            interference."   803 F. Supp. at 463-64.  In this court, Tri-            State  does not argue the claim  at length, asserting instead            that its tortious interference claim is "contingent" upon our            finding that  the alleged  anticompetitive conduct  enjoys no            immunity.                  We   think   the   fixing  of   tipping   fees   by  the            municipalities and MMWAC  is embraced by the  Maine statute--            Tri-State  makes  no  effort to  show  the  contrary--but, as            earlier stated, we cannot find  on this record that the terms            on  which  Waste  Management  of Maine  dealt  with  its  own            customers has been  the subject of regulation.   Accordingly,            count V, so  far as it makes allegations  against the private            defendants based on Waste Management of Maine's dealings with            its own  customers,  is remanded  for consideration  together            with the predation claims.  Nothing in the complaint explains            why  MMWAC is responsible for such contracts, however, and as            to it the  dismissal of count  V is sustained for  failure to            state a claim.                 Count  VI of  the  complaint asserts  a  claim under  42            U.S.C.   1983 against Auburn.  In part, this count says  that            the  City  of  Auburn  injunction  action  against  Tri-State
                 ________________            represented  discriminatory prosecution  in violation  of due                                         -23-
                                         -23-

            process principles.  Count VII makes the same complaint based            on equal protection principles.   Count VIII, the final count            of the complaint, re-asserts the allegations of counts VI and            VII as violations of Maine's  own civil rights statutes.  Me.            Rev. Stat.  Ann., tit. 5,     4682-83.  On  appeal, Tri-State            advises that it elects not to press the selective prosecution            issue in this court, reserving it for its state court appeal.                 This leaves only Tri-State's final contention--the other            subject of its count  VI claim--that the Auburn  flow control            ordinance  is "an  unconstitutional  taking of  [Tri-State's]            property without compensation."  Tri-State's theory seems  to            be that  the Auburn flow control ordinance  has crippled Tri-            State's waste disposal business.   This, says Tri-State, is a            business  in which  it has  engaged  for many  years and  its            interests in  continuing without  undue interference  deserve            protection as "investment-backed expectations."  Penn Central
                                                             ____________            Transp. Co. v. New York City, 438 U.S. 104, 124 (1978).
            __________     _____________                 While the Supreme  Court did  use the  quoted phrase  to            describe a pertinent consideration in takings cases, the Penn
                                                                     ____            Central opinion actually reaffirms that government for public
            _______            purposes   can,   without    compensation,   impose   general            regulations that may  severely limit the value  of an ongoing            business.    The  Supreme  Court  has  in  fact twice  upheld            municipal  ordinances  granting   one  waste  collector   the            exclusive  right to collect  and dispose of  waste within the                                         -24-
                                         -24-

            community,  putting  existing   haulers  out  of  business.11            Despite  Tri-State's  claims that  these cases  are outdated,            nothing in the  Supreme Court's more recent  decisions raises            serious doubts about  their validity.  The  Sixth Circuit has            rejected  an argument almost identical to Tri-State's.  Hybud
                                                                    _____            Equipment  Corp.  v. City  of  Akron, 654  F.2d  1187 (1981),
            _______________      _______________            vacated on other grounds, 455 U.S. 931 (1982).
            ________________________                                        * * *                  In this case, we have concluded  that, with the possible            exception  of  its  predation  claims  against   the  private            defendants, none of  Tri-State's claims has any  merit.  This            does not mean that there is no basis for Tri-State's concerns            about  the competitive impact  of the MMWAC  arrangements, or            for its assertion  that the plan is  unfair to it or  bad for            recycling.  But  government  action  may be  anticompetitive,            unfair or unwise  without being illegal.   Absent illegality,            the solution lies with the legislature and not in the courts.                 The  judgment of the  district court is  affirmed except
                                                          ________            for the dismissal  of the federal and state  antitrust claims            in  counts II-V  and the tort  claim in  count VI  insofar as            those  counts charge  the  Waste  Management defendants  with            predation   or   related   anticompetitive   conduct   toward                                
            ____________________                 11See  California  Reduction Co.  v.  Sanitary Reduction
                   ___  ________________________       __________________            Works, 199 U.S. 306 (1905); Gardner v. Michigan, 199 U.S. 325
            _____                       _______    ________            (1905).                                         -25-
                                         -25-

            customers.  Those claims are remanded for further proceedings
                                         ________            in accordance with this opinion.  No costs.                 It is so ordered.
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