RESPONDENT:Omni Outdoor Advertising, Inc.
LOCATION:Oklahoma City Board of Education
DOCKET NO.: 89-1671
DECIDED BY: Rehnquist Court (1990-1991)
LOWER COURT: United States Court of Appeals for the Fourth Circuit
CITATION: 499 US 365 (1991)
ARGUED: Nov 28, 1990
DECIDED: Apr 01, 1991
A. Camden Lewis – on behalf of the Respondent
Joel I. Klein – on behalf of the Petitioner
Media for City of Columbia v. Omni Outdoor Advertising, Inc.
Audio Transcription for Opinion Announcement – April 01, 1991 in City of Columbia v. Omni Outdoor Advertising, Inc.
William H. Rehnquist:
The opinion of the Court in No. 89-1671 City of Columbia versus Omni Outdoor Advertising, will be announced by Justice Scalia.
Omni Outdoor Advertising Incorporated entered the billboard market in the City of Columbia, South Carolina in 1981.
In response to the new competition, Columbia Outdoor Advertising Incorporated, COA which at that time controlled more than 95% of the Columbia market, lobbied city officials to enact zoning ordinances restricting billboard construction.
After such ordinances were passed, Omni, the new entrant, filed suit against COA and the city.
Both petitioners here, under Sections one and two of the Sherman Act alleging that the ordinances were the result of an anti-competitive conspiracy.
Omni obtained jury verdict on all counts, but the District Court set the verdict aside and entered judgment for petitioners on the ground that their activities were outside the scope of the federal anti-trust laws.
The Court of Appeals for the Fourth Circuit reversed and reinstated the jury verdict.
In an opinion filed today, we reverse the Fourth Circuit’s decision and hold that both the city and COA are immune from federal anti-trust liability for their activities involving the billboard ordinances.
In 1943, in a case called Parker versus Brown, we held that the governmental acts of the states are not covered by the Sherman Act.
Later cases have recognized that this immunity also extends to the governmental acts of municipalities when they are acting pursuant to a power delegated by the states to restrict competition.
We hold that the grant of the zoning of authority qualifies as such a delegation so that the city’s zoning actions have Parker immunity.
The Court of Appeals said, however, that there is a conspiracy exception to Parker that strips the city of its immunity since the city conspired with officers of COA to impose the anti-competitive ordinance.
We hold that there is no such exception.
A conspiracy exception would render Parker immunity and nullity if it applied to all agreements between government regulators and private parties.
In our democratic system, it is both inevitable and desirable that public officials agree to do what one or another group of private citizens urges upon them, nor is it feasible to limit a conspiracy exception to those agreements with private parties that are corrupt in the loose sense that they further private interests at the expense of the public interest.
Virtually, all government regulatory action is open to such a general charge, and if public officials had to risk ex post facto judicial determination of liability on the basis of such a standard, state action would be hamstrung.
And finally, it would not be proper to establish a conspiracy exception limited exclusively to actions taken in exchange for bribes or for some other violation of law, since it is the function of the Sherman Act to regulate private trade restraints not to supplement government ethics laws.
In addition to finding the city immune under Parker, we find the private company, COA, immune under a car larry to Parker known as the North Pennington doctrine.
Pursuant to that doctrine, the federal anti-trust laws do not regulate the conduct of private individuals in seeking anti-competitive action from the government.
The Court of Appeals held that that doctrine does not apply hear because COA’s lobbying activities with respect to the ordinances, were a sham.
That was error.
The sham exception to the North Pennington doctrine applies only when a private party uses the governmental process not for the genuine purpose of achieving the governmental action requested, including anti-competitive governmental action but rather for the purpose of causing competitive harm.
A good example would be the regular filing of frivolous objections to a competitor’s request for government licenses, knowing that the challenges would be denied but hoping to cause the competitor expense and delay in defending against.
Here, of course, COA’s lobbying was not a sham.
If anything, it was too much in earnest.
Finally, we reject Omni’s suggestion that we adapt a conspiracy exception to North Pennington for largely the same reasons that we have rejected such an exception to Parker.
The decision of the Court of Appeals for the Fourth Circuit is reversed and the case is remanded for further proceedings consistent with our opinion.
Justice Stevens has filed a dissenting opinion which Justices White and Marshall have joined.