The Increasing Risks of Antitrust Liability By Patrick R. James and H. Edward Skinner
INTRODUCTION Local governments have been faced with an increasing number of antitrust suits as a result of two recent Supreme Court decisions. These decisions. City of Lafayette v. Louisiana Power & Light Company' and Community Communications Company v. City 01 Boulder'. are the last 01 a series of Supreme Court decisions eroding the so-called "state action doctrine." Under the state action doctrine, which was first enunciated in Parker v. Brown. 3 it was assumed that all governmental entities, including state agencies or other subdivisions of the state, were, because of their status, exempt from the antitrust laws. Wilh the erosion of this doctrine local governments have been faced with
antitrust suits for a number of activities, "including regulations of cable television businesses, operation of electric utility systems, operation of sewage treatment services. provision of public
Currently, in order for the state action doctrine to apply two tests must be met: "First. the challenged restraint must be '... clearly articulated and affirmatively expressed as state policy;' second, the policy must be 'actively supervised' by the State itself." Thus, local governments are not automatically exempt from the antitrust laws simply by reason of their status. water supplies, denial of
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tele-
phone franchise, zoning, leasing of parking spaces for baseball
games, regulating parking lot operators. operation of municipal
airports, regulating on-airport car rental concessions. regulation and licensing of taxis, awarding wrecker tow-in contracts, solid waste management, regulating hospital facilities, and creation of ambulance service systems. "4 At least two antitrust suits have been filed against Arkansas cities. The first suit was against the mayor and city council members of Heber Springs for granting an exclusive solid waste utility franchise for the collection and disposal of solid waste.' United States District Judge G. Thomas Eisele eventually dismissed the case holding that the city official's actions were protected under the state action doctrine.' The second suit has been filed against the City of Little Rock, its Board of Directors, and other parties alleging that the defendants violated Sections I and 2 of the Sherman Antitrust Act by enacting an ambulance service
ordinance.' The Complaint further alleges that the City ordinance incorporates major aspects of a
Editor's Note: Patrick R. James is an associate with the law firm of Gill, Skokos, Simpson, Buford & Owen, P.A., in Little Rock and is a member of the Antitrust and Trade Regulations Committee of the Ar-
kansas Bar Association. His practice is general civil litigation, including antitrust and civil rights defense. A 1982 graduate of the University of Arkansas at Little Rock School of Law, he served as assistant editor of the UALR Law Journal.
H. Edward Skinner is a member in the firm of Prince & Ivester, P.A .. in Little Rock. He is primarily engaged in general practice with an emphasis on administrative agencies and the Public Service l26/Arkansos Lawyer/July 1984
Commission. antitrust and general corporate law. He has been a member of the firm since its inception in January, 1984. He was vicepresident of Legal Services at ALLTEL Corporation (formerly Allied Telephone Company) in Little Rock before becoming a member pf the firm. A 1972 graduate of the University of Missouri School of Law at Kansas City, he also attended the University of Missouri School of Law at Columbia from 1968-70 and was a member of the Missouri Law Review. He is a member of the Antitrust and Trade Regulations Committee of the
Association. This article is a project of the Antitrust and Trade Regulations Committee.
"public utility model" under which, for it to be economically feasible, the municipally licensed company must be the only ambulance company allowed to do business in the City. The plaintiffs are seeking $50,000.00 in damages. Although judgments have been awarded against local governments for federal antitrust violations in only two cases to date. these judgments have been staggering. The first case in which such a judgment was awarded was Affiliated Capital Corp, v. City of Houston,' In that case the jury awarded a 2.1 million dollar judgment against the Mayor of the City of Houston and successful applicants for a cable television franchise in the City of Houston.