MOBILE COUNTY WATER v. MOBILE AREA WATER AND SEWER Civil Action No. 07-0357-WS-M.
567 F.Supp.2d 1342 (2008)
MOBILE COUNTY WATER, SEWER AND FIRE PROTECTION AUTHORITY, INC., Plaintiff, v. MOBILE AREA WATER AND SEWER SYSTEM, INC., Defendant.
United States District Court, S.D. Alabama, Southern Division.
July 23, 2008.
Jennifer S. Holifield, Joseph Pettis Isbell, Thomas Troy Zieman, Jr., Anthony M. Hoffman, Jerome E. Speegle, Zieman, Speegle, Jackson & Hoffman, L.L.C., Jay M. Ross, Ross & Jordan, P.C., Lawrence J. Hallett, Jr., The Hallett Firm, Mobile, AL, for Plaintiff.
Frank G. Taylor, James E. Atchison, Vaughan Drinkard, Jr., The Atchison Firm, P.C., Mobile, AL, Marcus Allen Huff, Wilmer & Lee, Huntsville, AL, for Defendant.
WILLIAM H. STEELE, District Judge.
This matter comes before the Court on cross-Motions for Summary Judgment (docs. 37, 81). The Motions have been briefed and are ripe for disposition at this time.
A. Relevant Facts.
This lawsuit is the latest battleground in a decades-old turf war between two public utilities who provide services in overlapping territory to certain customers outside the city limits of Mobile, Alabama, but within the boundaries of Mobile County, Alabama. The relevant facts are, with few exceptions, not in dispute, so much so that it would have behooved the parties, streamlined the summary judgment process, and obviated the need for plaintiffs sizeable evidentiary submission had they submitted their Rule 56 motions on stipulated facts, given the paucity of material factual disagreements between them.
Plaintiff, Mobile County Water, Sewer
The genesis of this lawsuit lies in MAWSS's practice of requiring new customers to accept MAWSS's treated water, should MAWSS decide to supply it, as a condition of receiving MAWSS sewer service. To be clear, there is no dispute that MAWSS in fact engages in such a practice. MAWSS does not shy away from this fact, by either denying or downplaying it, but instead readily admits it. In particular, MAWSS freely concedes in its briefs that "MAWSS requires new sewer customers to accept water service from MAWSS if such service is available" and that "MAWSS requires new customers to accept MAWSS water service, if it is made available, if said new customer wishes to receive MAWSS sewer service." (Doc. 37, Exh. 1 at 2; doc. 85, at 11.)
B. Claims Joined in this Proceeding.
In evaluating the lawfulness of MAWSS's "all-or-nothing" policy of supplying sewer and water services in MoCo's service area, the Court is of course constrained by the specific theories of liability interposed by plaintiff; therefore, the framing of the issues in the pleadings is of critical importance to the summary judgment analysis. The Amended Complaint unambiguously reflects that MoCo has postured this action exclusively in terms of antitrust violations. Although the Amended Complaint is not organized by specific causes of action, the sum total of the legal grounds on which MoCo seeks relief against MAWSS in this action are set forth in that filing as follows:
(Amended Complaint (doc. 6), ¶¶ 21-24.)
Simply stated, then, MoCo brought this action contending that MAWSS's "all-ornothing" bundling of water services with sewer services in MoCo's service area constitutes an unlawful tying arrangement in violation of federal and state antitrust laws.
The parties have now filed cross-motions for summary judgment as to MAWSS's liability to MoCo under federal and state antitrust provisions.
II. Summary Judgment Standard.
Summary judgment should be granted only if "there is no issue as to any material fact and the moving party is entitled to a judgment as a matter of law." Fed. R.Civ.P. 56(c). The party seeking summary judgment bears "the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial." Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991). Once the moving party has satisfied its responsibility, the burden shifts to the nonmovant to show the existence of a genuine issue of material fact. Id. "If the nonmoving party fails to make `a sufficient showing on an essential element of her case with respect to which she has the burden of proof,' the moving party is entitled to summary judgment." Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)) (footnote omitted). "In reviewing whether the nonmoving party has met its burden, the court must stop short of weighing the evidence and making credibility determinations of the truth of the matter. Instead, the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 999 (11th Cir.1992) (internal citations and quotations omitted). "Summary judgment is justified only for those cases devoid of any need for factual determinations." Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1016 (11th Cir.1987) (citation omitted).
"The applicable Rule 56 standard is not affected by the filing of cross-motions for summary judgment." Godard v. Alabama Pilot, Inc., 485 F.Supp.2d 1284, 1291 (S.D.Ala.2007); see also May v. A Parcel of Land, 458 F.Supp.2d 1324, 1333 (S.D.Ala.2006) (same). Indeed, the Eleventh Circuit has explained that "[c]ross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed." United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir.1984) (citation omitted); see also Wermager v. Cormorant Tp. Bd., 716 F.2d 1211, 1214 (8th Cir.1983) ("the filing of cross motions for summary judgment does not necessarily indicate that there is no dispute as to a material fact, or have the effect of submitting the cause to a plenary determination on the merits"). Nonetheless, "cross-motions may be probative of the absence of a factual dispute where they reflect general agreement by the parties as to the dispositive legal theories and material facts." Godard, 485 F.Supp.2d at 1291; see also May, 458 F.Supp.2d at 1333. That is precisely the case here, as the parties appear to be in agreement that the material facts are undisputed and that certain narrow legal issues are dispositive of the claims joined herein.
A. State Action Immunity. 11
In its Answer to the First Amended Complaint (doc. 11), MAWSS stated as its
"Under the state action immunity doctrine ..., states are immune from federal antitrust law for their actions as sovereign." Crosby v. Hospital Authority of Valdosta and Lowndes County, 93 F.3d 1515, 1521 (11th Cir.1996). This protection is not confined to states, but has been extended to municipalities and instrumentalities of states, albeit under a different legal test. See id. (explaining that state action immunity does not apply directly to a state's political subdivisions because they are not themselves sovereign, such that "actions by the State and actions by municipalities are evaluated under different standards"); see also Marshall v. Planz, 13 F.Supp.2d 1231, 1233 (M.D.Ala.1998) (recognizing that state action immunity "may be invoked not only by states themselves, but also by states' political subdivisions, including municipal corporations"). The Eleventh Circuit has explained that "political subdivisions such as municipalities are immune from antitrust liability if their anticompetitive acts follow a clearly articulated and affirmatively expressed state policy." Bankers Ins. Co. v. Florida Residential Property and Cos. Joint Underwriting Ass'n, 137 F.3d 1293, 1296 (11th Cir.1998) (citation omitted); see also Avalon Carriage Service Inc. v. City of St. Augustine, FL, 417 F.Supp.2d 1279, 1288 (M.D.Fla.2006) ("before a municipality will be entitled to the protection of the state action exemption from the antitrust laws, it must demonstrate that it is engaging in the challenged activity pursuant to a clearly expressed state policy") (citation omitted). This "clearly articulated state policy" test applies here.
The Alabama legislature has unambiguously declared that boards of water and sewer commissioners (such as MAWSS) are authorized and empowered to combine water and sewer systems for purposes of operations, financing and billing. For example, the Alabama legislature expressly authorized such boards "[t]o combine the water system and the sewer system as a single system for the purpose of operation and financing." Ala.Code § 11-50-343(a)(7). Elsewhere, the legislature reiterated that "[t]he board may combine any water system and sewer system owned and operated by it" and provided that a board "may provide a single schedule
Reviewing all of these statutory provisions in the aggregate, the Court concludes that MAWSS's enactment of an all-or-nothing policy was authorized by the Alabama legislature. To be sure, MoCo is correct that the relevant statutes do not expressly indicate that MAWSS may, condition the sale of sewer services to a customer on that customer's purchase of its water services. But that is not the proper test. See Bolt, 980 F.2d at 1385 ("the municipality is not required to point to a specific, detailed legislative authorization" to establish state action immunity defense). The Alabama legislature explicitly stated (a) that MAWSS was empowered to combine its water services and sewer services for purposes of operations, financing and fees, (b) that MAWSS was empowered to make and enforce any rules and regulations for the maintenance and operation of its combined water and sewer systems that MAWSS deemed necessary or desirable for the efficient operation of such systems; (c) that MAWSS was empowered to take all actions necessary or convenient to carry out its powers; and (d) that these grants of authority to MAWSS should be liberally construed. In the opinion of this Court, no reasonable reading of Chapter 50, Article 10 of Title 11 of the Alabama Code could yield a conclusion that MAWSS lacked statutory authorization to enact and adhere to the all-or-nothing policy on which MoCo's antitrust allegations are founded.
Moreover, the Court finds that the foreseeability element is also satisfied. It is
A trio of Eleventh Circuit decisions concerning analogous water statutes in Florida and Georgia bolster this conclusion. See McCallum v. City of Athens, Ga., 976 F.2d 649 (11th Cir.1992); Falls Chase Special Taxing District v. City of Tallahassee, 788 F.2d 711 (11th Cir.1986); Auton v. Dade City, Fla., 783 F.2d 1009 (11th Cir. 1986). In all three cases, the courts examined state statutes that authorized cities to create and construct municipal water supplies. McCallum, 976 F.2d at 654; Falls Chase, 788 F.2d at 713; Auton, 783 F.2d at 1010. Each of those statutory frameworks granted the municipality the power of eminent domain. McCallum, 976 F.2d at 654; Falls Chase, 788 F.2d at 713; Auton, 783 F.2d at 1011. Each of those statutory provisions also authorized municipalities to fix water rates. McCallum, 976 F.2d at 654; Falls Chase, 788 F.2d at 714; Auton, 783 F.2d at 1011. Finally, both Florida and Georgia barred municipalities from constructing a water system if a similar system already existed in immediately adjacent territory. McCallum, 976 F.2d at 654-55; Falls Chase, 788 F.2d at 713; Auton, 783 F.2d at 1010. Upon examining these features of the Georgia statute, the Eleventh Circuit opined that state action immunity applied because "[t]he clear implication is that these state policies oppose competition ... [and] contemplate anticompetitive effects." McCallum, 976 F.2d at 655. As for the Florida statute, the Eleventh Circuit's conclusion was that "[t]he cumulative effect of these statutes is to grant Florida municipalities broad power
At the risk of repetition, the Court emphasizes that MAWSS was expressly authorized by the Alabama legislature to operate municipal water and sewer systems, to combine those systems for operational purposes, to implement any rules and regulations pertaining to the operations of those systems that MAWSS deemed desirable for their efficient operation, and to do all acts and things necessary or convenient to carry out those powers, with the additional overlay that these provisions must be liberally construed. Viewed collectively, Alabama's statutory scheme unquestionably authorized MAWSS to require its sewer customers to purchase water from it if they wanted to received MAWSS sewer service, and the anticompetitive effects of MAWSS's actions were reasonably foreseeable from the authority granted it by the legislature. To find otherwise would be to disregard the teachings of Town of
In short, the Court holds that, as a matter of law, MAWSS's challenged conduct follows a clearly articulated and affirmatively expressed state policy. Defendant's practice of conditioning sewer service on its customers' purchase of defendant's water service was authorized by the Alabama legislature and its anticompetitive effects are a foreseeable result of this authorization. Therefore, MAWSS is entitled to state action immunity with respect to MoCo's federal antitrust claims.
B. The Non-Impact of Alabama Code § 11-50-1.1.
In arguing that the "clearly articulated state policy" requirement is not satisfied here, MoCo spends little time parsing Chapter 50, Article 10 of Title 11 of the Alabama Code, as the Court has done, but instead devotes the bulk of its argument to discussion of Ala.Code § 11-50-1.1. That statute provides, in relevant part, that "[m]unicipalities are hereby prohibited from acquiring, or duplicating any services of, any waterworks system or any part thereof, operated by a corporation or association which has been organized under... Sections 11-88-1 through 11-88-21... without the consent of a majority of the members of the governing board of said corporation or association." Ala.Code § 11-50-1.1. MoCo submits evidence and extensive legal argument in support of the proposition that MAWSS's conduct of laying water pipes in MoCo's service territory amounts to unlawful duplication of MoCo's water services, in violation of § 11-50-1.1.
Plaintiff's invocation of Alabama's antiduplication statute does not alter (and, paradoxically, actually reinforces in some respects) the state action immunity analysis set forth in Section III.A., supra. As an initial matter, it bears emphasis that MoCo has asserted no causes of action sounding in § 11-50-1.1 against MAWSS in these proceedings. To be sure, MoCo
If the Court understands MoCo's position correctly, its purpose in focusing its summary judgment briefs on the § 11-50-1.1 issue is to show that the Alabama legislature did not authorize MAWSS's conduct. As mentioned supra, state action immunity from federal antitrust law applies to political subdivisions only when their activities are "both authorized by statute and [their] anticompetitive effect is an intended (meaning foreseeable) result of this authorization." Bankers, 137 F.3d at 1298. Thus, MoCo purports to be raising its § 11-50-1.1 argument to demonstrate that the Alabama legislature did not authorize MAWSS's activities, such that MAWSS is not protected by state action immunity. The Court cannot agree.
With its § 11-50-1.1 argument, however, MoCo would recast its antitrust claims into something they are not. If MoCo's § 11-50-1.1 argument is accepted as true, then the Alabama legislature did not authorize MAWSS to extend its water treatment service network into areas already covered by MoCo's water treatment system. If that were correct, then MAWSS's act of encroaching on MoCo's turf would contravene Alabama law, and MoCo would prevail in the pending state-court action. But that encroachment is not the conduct of which MoCo is complaining in this case. Here, MoCo has specifically delineated its antitrust claim to be about MAWSS's requirement that sewer customers buy its water service, not MAWSS's presence in MoCo's service area. Stated differently, the Sherman Act violation claimed by MoCo is a tying arrangement, not a duplication of services.
Moreover, plaintiff's reliance on § 11-50-1.1 is misplaced because its result-driven reasoning would lead to absurd results in an array of circumstances. Tying arrangements are generally proscribed by the Sherman Act, unless immunity applies. To accept MoCo's position, however, would be effectively to declare that MAWSS's all-or-nothing policy violates the Sherman Act when it occurs in MoCo's service territory (because of § 11-50-1.1), but not when it occurs outside the territory of MoCo or any other rural water authority (where § 11-50-1.1 would not apply).
Finally, far from defeating MAWSS's state action immunity defense, MoCo's § 11-50-1.1 arguments actually strengthen and reinforce defendant's entitlement to immunity under that doctrine. As interpreted by MoCo, § 11-50-1.1 is an anticompetitive statute evincing a legislative intent to curtail or, indeed, eradicate all competition between municipal boards of water and sewer commissioners, on the one hand, and rural water authorities, on the other. For example, MoCo insists that "[n]o Alabama Code section more clearly articulates the legislature's intent to prevent direct competition (and wasteful duplication of services) between Municipal
For all of the foregoing reasons, it is the determination of this Court that Alabama Code § 11-50-1.1 in no way undermines, alters or defeats defendant's entitlement to state action immunity from the federal antitrust claims interposed against it in this action.
C. The State-Law Antitrust Claim.
Having found that MAWSS is entitled to immunity with respect to the Sherman Act claims, the only remaining question is the fate of MoCo's state-law claim under Ala. Code § 6-5-60(a). That section creates a right of action for anyone "injured or damaged by an unlawful trust, combine or monopoly, or its effect, direct or indirect." Id.
For all of the foregoing reasons, the Court concludes that principles of state action immunity bar all of plaintiff's claims against defendant herein. Accordingly, Defendant's Motion for Summary Judgment (doc. 37) is
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