The district judge granted judgment n.o.v. in favor of the defendants and the plaintiff appealed. On appeal the Fifth Circuit reversed the lower court judgment and reinstated the jury's award of 2.1 million dollars.' In the second case, Unity Ventures v. County of Lake. a jury awarded a developer 9.5 million dollars against a county, a village and three officials. tO This award was automatically trehled to 28.5 million dollars hy the federal judge who presided over the case.
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
where the state has merely authorized or directed the challenged activity and that the local government action need not be compelled or mandated by the state." It is not clear whether the second p"mg of the Supreme Court's test. Le.. "active state supervision." is
applicable to local governments. In City of Boulder the Court specifically chose not to reach the question whether local governments "must or could satisfy the 'active state supervision' test focused upon in Midcw."" Relying on this language the Seventh," EighV' and Ninth Circuits" have specifically held that the active state supervision requirement does not
apply to traditional governmental functions. The following activities have been held to be traditional governmental functions or activities: fire prevention. police pro-
are undertaken pursuant to a local
tection, sanitation, public health, parks and recreation, public schools, hospitals, solid waste disposal. operation of municipol
government's home rule power
airfX>rts, ambulance service. regu-
sufficient to bring a local government under the state action doctrine since, "when the States position is one of mere neutrality" it "can hardly be said to have 'contemplated' the specific anti-
lation of taxicabs, sewage treatment, and public water supplies." The purpose of this article is to review particular Arkansas statutes which mayor may not provide protection to local governments under the state action doctrine. When applicable, statutes which affect counties will also be discussed. Specific attention will be given to whether a local government can grant an exclusive franchise or regulate businesses and be protected from the federal antitrust laws. Before discussing specific activities to determine whether they may be protected under the state action doctrine, the reader should be aware of two potential pitfalls. First, Article 2, ยง 19 of the Arkansas Constitution contains the following anti-monopoly provision: "Perpetuities and monopolies are contrary to the genius of a republic, and shall not be allowed..." Despite the apparent blanket prohibition, a grant of an exclusive
status. 12 Nor ore activities which
competitive actions. "'3
The Eighth Circuit has held that the clearly articulated and affirmatively expressed requirement
"is comprised of two elements: (I) the legislature must have authorized the challenged activity and (2) it must have done so with an intent to displace competition ..... Under this test. there must be both state authorization and contemplation of the challenged anticompetitive activity. "State authorization and contemplation can be found from comprehensive regulatory schemes, state supreme court decisions, actions of state agencies. or even broad au-
thority created under state law to undertake the challenged activity."" Despite some earlier authority to the contrary, the lower courts have generally held that the state action doctrine is applicable
franchise may not necessarily violate this section since the anti-
monopoly provision must be read and considered along with a local government's exercise of its police and public welfare powers." In Bridges v. Yellow Cab Co." the Arkansas Supreme Court held that the granting of an exclusive franchise for operation of a taxicab limousine service at a municipally owned airport did not offend the Constitution. The Court emphasized, however, that (I) the exclusive right was a narrow one, (2) the franchisee was required to provide service for the life of the franchise, and (3) the city council found there was not enough business for the service to be provided on a competitive basis. 24 Second, the Eighth Circuit in Westborough Mall, Inc. v. City of Cape Girardeau" has indicated that even if Arkansas law would bring the local government within the state action doctrine, the exemption could be lost if there is fraud or illegal conduct. The impact of the Westborough decision is unclear, but it could subject previously protected activities to the reach of federal antitrust laws. With these two caveats, the application of the state action doctrine to specific activities will now be discussed.
AMBULANCE SERVICES Arkansas cities of the first class with populations in excess of 35,000 have been granted broad powers to regulate, license and/or control emergency medical se!vices and ambulance operations "originating from within" their corporate limits. 26 Their powers include the right to regulate the rates or service fees for ambulance service 21 and the authority to license, franchise, or contract with ambulance companies on an exclusive basis." In granting these cities the right to grant exclusive licenses or franchises, the General Assembly legislatively determined that the "health, safety and welfare of the residents of the state" are harmed by the provision of municipal ambulance service on a competitive basis. 29 July 1984/Arkansas Lowyer/127