Court Opinion

ID: 9464134
Source: CourtListenerOpinion
Date Created: 2023-08-04 23:25:53.238545+00
Date Added: 2024-06-11T17:38:28.524482
License: Public Domain

WIDENER, Circuit Judge,
concurring in the result:
The district court entered summary judgment in favor of the defendants on three independent grounds — lack of a sufficient nexus with interstate commerce to confer jurisdiction under the antitrust laws, absence of standing of the plaintiffs to prosecute this action, and the existence of state action immunity from antitrust scrutiny. I join in Judge Wyzanski’s opinion reversing the court below on its first two grounds of judgment.
With respect to the question of state action immunity, I join in remanding the case to the district court for further consideration in light of Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141 (1976), decided subsequent to the granting *286of summary judgment below. Although, unlike Judge Wyzanski, I am not convinced that local governmental units cannot enjoy antitrust immunity, or that the compulsion of their laws cannot in appropriate instances confer it upon private defendants, I do agree that the proper application of Cantor calls for the development of a fuller factual record in the district court. I emphasize that upon remand a factual development must be had which relates not only to the question of the extent of involvement of the Commonwealth, through her laws or agencies, but also to the question of the involvement of local government, whether it be the county as such, or any of its agencies or controlled or authorized authorities.
I.
The significance of the opinion of the Court in Cantor lies in its limitation of the opinion in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), as controlling only in cases in which anticompetitive conduct is engaged in by public officials acting pursuant to State law, or by the State itself. “The only Sherman Act issue decided [in Parker] was whether the sovereign State itself, which had been held to be a person within the meaning of § 7 of the statute, was also subject to its prohibitions. Since the case now before us does not call into question the legality of any act of the State of Michigan or any of its officials or agents, it is not controlled by the Parker decision.” 428 U.S. at 591-92, 96 S.Ct. at 3117.
If the immunity bestowed by Parker applied only to the State itself and to those State officials who adopted and enforced California’s agricultural proration program, unresolved was the status with respect to the antitrust laws of those private individuals who were subject to the challenged regulations. The plurality opinion in Cantor thus faced the other side of the Parker coin, the extent to which private persons who engage in anticompetitive practices that are permitted or even required by State law are subject to Sherman Act proscriptions.
The clear import of the Court’s holding (and this is a majority) is that State approval of private conduct, even to the extent of formally requiring its continuation in certain circumstances, is insufficient by itself to confer immunity from antitrust liability. 428 U.S. at 592-98, 96 S.Ct. 3110, 3123. In Parker’s words, “a state does not give immunity to those who violate the Sherman Act by authorizing them to violate it, or by declaring that their action is lawful.” 317 U.S. at 351, 63 S.Ct. at 314. Read in light of Cantor, it thus appears that the “threshold inquiry” delineated in Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), “whether the activity is required by the State acting as a Sovereign,” 421 U.S. at 790, 95 S.Ct. at 2015, expresses no more than a necessary, though not necessarily sufficient, condition to a finding of immunity in the sphere of private conduct. The threshold defined in Goldfarb was not crossed in that case, thus ending the immunity analysis (“We need not inquire further into the State-action question because it cannot fairly be said that the State of Virginia through its Supreme Court Rules required the anticompetitive activities of either respondent.” 421 U.S. 790, 95 S.Ct. 2015); it was crossed in Cantor, where tariffs carrying the force of State law required the continuation of the challenged light bulb exchange program until further action of the State. Further inquiries were therefore necessary.
First, it was recognized that considerations of fairness could prevent the imposition of Sherman Act liability upon a person who was merely complying with State law. A the same time, however, the notion that antitrust liability must inevitably be deemed unjust in this context was specifically disclaimed. If the existence of the State compulsion resulted from a process of joint decisionmaking between the State and the defendant, i. e. if the defendant initiated the anticompetitive conduct and later obtained State approval, or if he otherwise engaged in the violation as much out of his own choice as State compulsion, there would be no unfairness in not immunizing *287him, even from treble damage liability. Indeed, this was found to be the case in Cantor, where the light bulb program, as characterized in a later Supreme Court pronouncement, “was instigated by the utility with only the acquiescence of the State regulatory commission.” Bates, v. State Bar of Arizona, - U.S. -, 97 S.Ct. 2691, 2698, 53 L.Ed.2d 810 (1977).
The resolution of this unfairness analysis necessitates a factual inquiry in each case. As is apparent here, however, sufficient findings have yet to be made. Quite significant are whether the defendants are indeed acting under legal compulsion (other than IDA, which appears from the record) and, if so, whether the compulsion is any other than of the defendants’ own design, with the role of the State or County being essentially quiescent. Cantor rejects immunity on the ground of unfairness where legal obligations inconsistent with the Sherman Act arose to a sufficient extent from a process of shared decisionmaking between State authorities and private defendants. Here, it seems that Fairfax Hospital Association and Commonwealth Doctor’s Hospital could have had guiding roles in this sale-lease transaction. I am not at all satisfied at this stage that the unfairness analysis suggested in Cantor (and rejected on the facts of that case) is supported by the record in this case as it now stands.
Secondly, even apart from considerations of fairness, an implied exemption from the antitrust laws may be found to the extent necessary to preserve existing State regulatory schemes that are demonstrated to serve strong, clearly articulated regulatory interests. No such interest was found in Cantor, where the State’s policy toward the distribution of light bulbs was inferred to be neutral, and where the fate of the challenged exchange program would leave “almost entirely unimpaired” Michigan’s interest in regulating the distribution of electricity. To be contrasted is the State of Arizona’s interest in regulating the practice of law, recently examined in Bates v. State Bar of Arizona, supra. “[T]he regulation of the activities of the bar is at the core of the State’s power to protect the public.” - U.S. at-, 97 S.Ct. at 2697-2698.
Examining the state of the record in the present case, it is again apparent that further factual findings by the district court are necessary to a determination of the implied exemption question. Along with Judge Hall and Mr. Justice Blackmun, I do not question the considerable interest a State may have in regulating matters of health and safety, an interest that may well encompass a desire to achieve hospital ownership, or control, or both. But for the purpose of implying an exemption from the federal antitrust laws, of central importance is not whether the area of regulation is one in which the State could assert a strong regulatory interest, but whether it has in fact done so, and more specifically, whether the allegedly anticompetitive activity is part of an existing program of regulation that could be disrupted by the superimposition of antitrust standards. The evil sought to be avoided is the unnecessary disruption of existing State regulatory schemes. See Cantor, supra, 428 U.S. at 595-98, 96 S.Ct. 3110. Thus, in Bates, supra, the attorney advertising case, the Court made reference not only to the significant interest of the State in regulating the legal profession, but that, “[mjore specifically, controls over solicitation and advertising by attorneys have long been subject to the State’s oversight.” -U.S. at-, 97 S.Ct. at 2698.
There is not sufficient indication in the record as presently constituted here, however, that the contemplated sale-lease transaction involved here is necessarily related to any existing regulatory interest in hospital ownership on the part of the State of Virginia or Fairfax County. Evidence to the contrary may appear if it is the fact that the transaction originated in an agreement between two private corporations, FHA and CDH. It is not enough to avail these private defendants of an absolute defense that the County’s mere participation in their activity was within the scope of the powers conferred upon it by the State legislature. Nor is it sufficient that the County has asserted a general regulatory interest *288in hospital facilities valid under State law. An essential inquiry the district court must make it whether this particular challenged transaction is part of an existing, public regulatory program that stands to be frustrated by the application of the antitrust laws. Only then may such an exemption be implied, to the minimum extent necessary to make the regulation work. Cantor, supra, 428 U.S. at 597, 96 S.Ct. 3110.
II.
Of considerable importance to the ultimate resolution of the immunity issue in this case is the question of whether local governmental units may be shielded by Parker-type immunity for state action, and whether the same analyses articulated in Cantor apply with equal force to those private defendants who act in accordance with local laws regulating economic activity. Lacking the benefit of the district court’s consideration of this issue in light of the most recent Supreme Court decisions on state action immunity, as well as of a complete factual record in this case, I would set out only in the most general terms a guideline for the district court to use in its reconsideration in this ease.
I think the case of City of Lafayette La. v. La. Power & Light Co., 532 F.2d 431 (5th Cir. 1976), cert. granted, 430 U.S. 944, 97 S.Ct. 1577, 51 L.Ed.2d 791 (1977), states approximately the correct rule. That case holds that the mere fact that the actions of a city are involved does not automatically place such actions outside the scope of the federal anti-trust laws, but adds that if the challenged activity were within the authority given a governmental entity to operate in a particular area, then the activity should be exempt. I would add to the rule of City of Lafayette that in addition to the prerequisites stated in that case the activity involved must meet one of the analyses set forth in Cantor.
I thus do not agree with Judge Wyzanski’s apparent conclusion that a local governmental body must as a matter of fact be acting at the compulsion of the State, almost its alter-ego, in order to qualify for a Parker exemption. Rather, I think the activities of a governmental entity, State or local, may qualify for a Parker exemption if they meet one of the analyses of Cantor. My principal disagreement with Judge Hall is that I do not think the record in this case presently supports a finding that the parties were acting pursuant to legislative command.
I further agree with Judge Hall and feel that the fact that the actions taken by the defendants in this case involve the health of the community should be given special weight in determining whether, under any of the analyses of Cantor, an exemption from the federal antitrust laws should apply-