Court Opinion

ID: 194827
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Date Created: 2011-02-07 02:25:58+00
Date Added: 2024-06-11T13:14:45.857104
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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

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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

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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
                                                                         

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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.

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                                         -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

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                                         -21-

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.

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                                         -22-

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

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                                         -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

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                                         -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).

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                                         -25-

customers.  Those claims are remanded for further proceedings
                                                 

in accordance with this opinion.  No costs.

     It is so ordered.
                                 

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