City of Lafayette v. Louisiana Power & Light Company

PETITIONER: City of Lafayette
RESPONDENT: Louisiana Power & Light Company
LOCATION: First Division Circuit Court, Pulaski County

DOCKET NO.: 76-864
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 435 US 389 (1978)
ARGUED: Oct 04, 1977
DECIDED: Mar 29, 1978

ADVOCATES:
Andrew P. Carter - for respondent
Jerome A. Hochberg - for petitioners
William T. Crisp - for the National Rural Elec

Facts of the case

Question

Media for City of Lafayette v. Louisiana Power & Light Company

Audio Transcription for Oral Argument - October 04, 1977 in City of Lafayette v. Louisiana Power & Light Company

Audio Transcription for Opinion Announcement - March 29, 1978 in City of Lafayette v. Louisiana Power & Light Company

William J. Brennan, Jr.:

The other case I have to announce the city of Lafayette versus Louisiana, The Louisiana Power and Light Company is here on certiorari from the Court of Appeals for the Fifth Circuit.

Twelve years ago a case styled Parker versus Brown held that the Sherman Act was not to be construed to prohibit the States “sovereign" from imposing anticompetitive restraints as Acts of government.

The question in this case is a whether municipalities has sub-divisions of states or also outside the reach of the Antitrust Laws when they engage in anti-competitive conduct.

The Court of Appeals held that petitioners, city of Lafayette, Louisiana was not automatically exempt from the antitrust laws simply by reason of its status as a subdivision of the State of Louisiana but was exempt only in respect of anticompetitive conduct engaged in pursuant to state policy, formerly adopted by the state to displace competition with regulation or monopoly service.

The Court of Appeals therefore remanded the case for the District Court to determine whether the City of Lafayette's alleged anticompetitive conduct was directed by the State of Louisiana since when the state itself has not directed or authorized an anticompetitive practice engaged in by a city.

The city in exercising its delegated powers must obey the Antitrust Laws.Our judgment today affirms the judgment of the Court of Appeals.

The opinion I have filed is the opinion for the court with respect to Part 1 and opinion with respect to Parts 2 and 3 only for Justices Marshall, Powell, Stevens and myself.

The Chief Justice has filed an opinion joining Part 1 of my opinion and agreeing with the direction for remand although expressing the view that the better rule would be to deny the city, the exemption, unless it appeared that the state compelled the anticompetitive activity and that the city demonstrated that the exemption is essential to the state regulatory scheme.

The dissents will be announced by Mr. Justice Stewart.

Potter Stewart:

I have filed a dissenting opinion in this case in which Mr. Justice White and Mr. Justice Rehnquist have joined and in most of which Mr. Justice Blackmun has also joined.

The fundamental error of the court in this case as we see it is its failure to recognize the difference between private activities authorized or regulated by government on the one hand and the actions of government itself on the other.

The legislative history of the Sherman Antitrust Act shows that it was not aimed at Acts of government but at concentrations of private economic power unresponsive to public need.

In the words of one Senator, great trusts, great corporations and large moneyed institutions.

Recognizing this congressional intent, the Court more than 35 years ago in a case called Parker against Brown held that the antitrust laws apply to private activities and not to governmental action.

There can be no doubt on which side of the line the cities in this case actions fall.

Municipal corporations are instrumentalities of the State.

City governments are subject to direct popular control through their own electorates and through the state legislature.

They are a far cry from the private accumulations of wealth that the Sherman Act was intended to regulate.

And under the authority of Parker against Brown the petitioner cities in this case clearly are not subject to the Federal Antitrust Laws.

The court's decision in this case marks an extra ordinary intrusion into the operation of state and local government in this country.

Its impact can hardly be over stated.

As a practical result of the vagueness and uncertainties in today's prevailing opinions, each time a city grants an exclusive franchise, each time it choses to provide a service itself on a monopoly basis such as water service or refuses to grant a zoning variance to a business or even as alleged in this case brings litigation on behalf of its citizens.

A Federal Court may hold that it has violated the Antitrust Laws.

Today's decision will impose truly staggering costs on the thousands of municipal governments in our country.

Cities whose grave economic plight was addressed this very week by the President of the United States.

In this case a rather typical Antitrust action, the respondent claims that it had suffered damages of $180 million as a result of just one of the antitrust violations it alleged.

Multiplied by 3 as the statute absolutely requires, this amounts to $540 million on this one claim alone to be recovered from cities with the combined population of about 75,000 people.

The judgment of this size would assure bankruptcy for almost any city in this country.

And even if the cities ultimately prevail in this law suit, their citizens will have to bear the rapidly mounting costs of antitrust litigation in the form of increased taxes or decreased services.

The specter of a city closing its schools, discharging its policemen and curtailing its fire department in order to defend a Federal Antitrust suit which surely dismay the Congress that enacted the Sherman Act.