Nos. 94-4323, 94-4496.United States Court of Appeals, Eleventh Circuit.
FILED March 8, 1996.
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James P. Atwood Washington, DC, Daniel M. Gribbon, Steven J. Rosenbaum, Washington, DC, for appellants.
David H. Erichsen, Boston, MA, Charles J. Gray, Peter A. Spaeth, Boston, MA, for appellees.
Appeals from the United States District Court for the Southern District of Florida.
Before EDMONDSON, Circuit Judge, HILL, Senior Circuit Judge, and MILLS[*] , District Judge.
HILL, Senior Circuit Judge:
[1] This is an appeal from the denial of a motion for summary judgment by the district court.[1] Two questions are presented: first, whether a public utility is immune from antitrust liability under the state-action doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), for its allegedly anti-competitive conduct concerning a cogenerator[2]Page 1564
in the areas of wheeling,[3] rates, and interconnection; and second, whether lobbying of a county legislative body by the utility is protected from antitrust liability under th Noerr/Pennington doctrine. Eastern RR. Presidents Conference v. Noerr Motor Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14 L.Ed.2d 626
(1965). The district court found that the utility was not entitled to immunity from antitrust sanctions for its actions. We disagree. The denial by the district court of the utility’s motion for summary judgment is reversed.[4]
[2] I. FACTUAL BACKGROUND
[3] Shortly after Congress enacted the Public Utility Regulatory Policies Act of 1978 (PURPA),[5] Metropolitan Dade County, Florida (Dade) began to consider a cogeneration facility as part of its Miami Downtown Government Center (Center), then in the planning stages. At the time, Appellees (Cogenerators)[6] were engaged in the business of developing cogeneration projects nationwide. They also supplied turbines and related services for use in cogeneration projects. The Cogenerators encouraged Dade to construct such a facility using their equipment and services.
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utility engaged in three functions: generation, transmission, and distribution and sale of electric energy.[8] It services southern and eastern Florida, including most of Dade. FPL is regulated by the Florida Public Service Commission (PSC).[9] It owns and controls ninety percent of the total electrical generating capacity in its service area and the electrical grid with which Center can interconnect. FPL has monopoly power within its service area both as to the purchase of wholesale power and the sale of retail power.
[5] In 1981, Dade issued requests to bid on the Center cogeneration facility. Cogenerators’ proposal was selected and in late 1983, Dade and the Cogenerators entered into contracts providing for the construction and operation of a twenty-seven megawatt cogeneration facility at Center and for the supply of cogeneration equipment for the project. The Cogenerators agreed to operate Center for Dade for sixteen years. The Cogenerators also contracted to supply electrical and thermal power to Dade.[10] Dade and the Cogenerators were to share in the profits, if any, from operating the Center; the Cogenerators were to absorb the losses.[11] The final contract allowed for excess power, if any, from Center, to be dispensed to Dade facilities outside Center, such as to the Jackson Memorial Hospital/Civic Center complex (Hospital).[12] Practically speaking, excess power could be dispensed only one of two ways, either via a wheeling arrangement with FPL or by constructing a separate transmission line. A separate line would require the approval of the local legislative body, i.e., the Dade County Board of Commissioners (Commission). With these parameters in place, construction of the cogeneration facility commenced in mid-1984 and the facility became fully operational at the end of 1986.[13]Page 1566
[6] Center, armed with the capability to produce twenty-seven megawatts of electrical power, actually needed only ten megawatts with which to operate. With seventeen surplus megawatts of generating capacity, Center quickly proved to be unprofitable. By then, however, the die was cast; the project was in place.[14]Page 1567
against the construction of the separate transmission line.
[12] Within weeks, the Cogenerators filed this suit.[13] II. PROCEDURAL BACKGROUND
[14] The Cogenerators contend they suffered losses at Center due to FPL’s anti-competitive conduct in three areas: (1) by FPL’s refusal to wheel, when FPL allegedly prevented Cogenerators from providing service to Hospital; (2) by FPL’s manipulation of its rate structure (when FPL allegedly offered lower rates to customers considering cogeneration; paid cogenerators too little for their excess power; and proposed higher rates for backup power sold to cogenerators); and (3) by FPL’s interference with interconnection (when FPL allegedly imposed unreasonable terms in the interconnection agreement governing the manner in which Center is physically connected to FPL’s system).[20]
[17] III. STANDARD OF REVIEW
[18] Application of the state-action and Noerr/Pennington immunity doctrines is a question of law. See F.T.C. v. Hospital Bd. of Directors of Lee County, 38 F.3d 1184, 1187 (11th Cir. 1994). As the question of immunity is strictly one of law, this court makes a de novo determination of whether the district court erred in denying summary judgment. Bolt v. Halifax Hosp. Medical Center, 980 F.2d 1381, 1384 (11th Cir. 1993).
[19] IV. DISCUSSION[20] A. Introduction
[21] FPL’s motion for summary judgment relies principally on two immunity doctrines: the state action immunity doctrine and th Noerr/Pennington immunity doctrine. The district court denied summary judgment under both.
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Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63 L.Ed.2d 233
(1980), a unanimous Court established a two-pronged test to determine when private party anticompetitive conduct is entitled to state action immunity from antitrust liability: (1) the conduct had to be performed pursuant to a clearly articulated policy of the state to displace competition with regulation; and (2) the conduct had to be closely supervised by the state. Id.
at 105, 100 S.Ct. at 943; see also F.T.C. v. Ticor Title Ins. Co., 504 U.S. 621, 112 S.Ct. 2169, 119 L.Ed.2d 410
(1992).[22] These two prongs are addressed below.
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here, without qualification, that is, including SEBS.[24]
[31] 2. Conduct Actively Supervised by the State. [32] This second prong of the state action defense applies when the challenged conduct is by a private party rather than a government official. Ticor, 504 U.S. at 630, 112 S.Ct. at 2175. Active state involvement is the second precondition for antitrust immunity; the conduct by the private party has to be closely supervised by the state. Midcal, 445 U.S. at 105-06, 100 S.Ct. at 943-44. The active supervision requirement is designed to ensure that the state has “ultimate control” over the private party’s conduct, with the power to review and disapprove, if necessary, particular anticompetitive acts that may offend state policy Patrick v. Burget, 486 U.S. 94, 101, 108 S.Ct. 1658, 1663, 100 L.Ed.2d 83 (1988). [33] The district court considered FPL’s conduct in three areas alleged to be anticompetitive by the Cogenerators: (1) FPL’s refusal to wheel; (2) its use of rates; and (3) its alleged interference with interconnection. It determined that for FPL to meet the second prong of the state action defense, Florida, through the PSC, must have “actively supervised, substantially reviewed, or independently exercised judgment and control” over FPL’s “overall anti-competitive campaign.” [34] In each of the three areas, the district court found that, while the PSC had the power to review FPL’s conduct, it was not given the opportunity to exercise its power`to review FPL’s conduct. Therefore, the district court determined that the PSC’s regulatory authority (in application or as applied) did not satisfy the second prong of the state action immunity standard. [35] As we conclude that the PSC did in fact exercise active supervision over FPL, we do not discuss these areas separately, as the same rationale applies to each. [36] 3. The Active Supervision in this Case. [37] In 1987, the PSC denied Dade’s petition to allow the Cogenerators to wheel power to Hospital because they could not satisfy the PSC self-service wheeling rules. In re: Petition of Metropolitan Date County, Order No. 17510 (1987).[25] [38] The district court notes that FPL stands behind this PSC ruling as conclusive evidence of active state supervision. The district court finds this reliance misplaced. It focuses instead on the circumstances leading up to the PSC hearing: FPL’s acts that have their genesis in the embryonic stages of Center when FPL participated in the early negotiations of the Cogenerator-Dade agreement. That is, under an estoppel-like analysis, the district court found that, when FPL ostensibly gave its blessing to the contract (with full knowledge that it contemplated: (1) the wheeling of excess power by FPL to other Dade locations; (2) the conveyance of power to other Dade facilities through a direct transmission line; or (3) the sale of excess power to FPL at avoided cost rates), it can’t be heard to complain now. The district court’s determination is based, not on whether the PSC had the power to actively supervise and review FPL’s conduct, but on whether it was ever given the opportunity to exercise its power to supervise and review (and possibly disapprove), these early acts of FPL.[26]Page 1570
[39] That is not the issue. The issue is this: Has the State of Florida, through its state regulatory agency, the PSC, actively supervised FPL in the areas of wheeling, rates and interconnection? The answer is clearly yes, as to each. The fact that FPL didn’t complain about wheeling or rates or interconnection when it first reviewed the Center contract is not material as to whether or not the PSC had the power to actively supervise FPL. That power is insulated. FPL’s failure to object does not take away from the PSC its opportunity to exercise the power of active supervision. Failure by the parties to commence an action or proceeding (at the time when the district court apparently thought they should have objected), does not constitute the nullification of the PSC’s power to act. [40] The PSC exercises its powers only when called upon to do so. No call was made. For example, the decisions of this circuit govern or control a plethora of legal issues — but if a particular issue is never brought before us — it doesn’t mean we don’t have control. We don’t have opportunity — but we still have control. We still have active supervision. [41] The record is clear — the doors to the PSC were open to all with standing to complain. Being met with a complaint, the PSC had the full power to actively supervise. Whether or not the State, through the PSC, exercises its control sua sponte is not material, unless, of course, there is an apparent devious design to abdicate or obstruct control, and that is not the case here. The record shows that, when the PSC was called upon, they acted. We, the judiciary, do not have to take a walk with the PSC members to see if they visit FPL’s offices every morning. [42] In sum, Florida has clearly articulated policies regarding the relationship between FPL and the Cogenerators. In addition, the record is clear that the PSC actively supervised all aspects of FPL’s alleged anti-competitive conduct. We conclude, therefore, that both prongs of the state action immunity doctrine are satisfied here and FPL’s conduct is immune from antitrust liability in each of the three areas of wheeling, rates and interconnection. [43] C. The Noerr/Pennington Doctrine of ImmunityPage 1571
in Noerr grew out of an “economic life or death” struggle between railroads and the trucking industry for the lucrative long-distance hauling of heavy freight. Noerr, 365 U.S. at 129, 81 S.Ct. at 525. The truckers alleged that the railroads were behind a publicity campaign designed to procure legislation that would hurt the trucking industry. Id. The Noerr Court found that attempts by the railroads to secure the passage and enforcement of anticompetitive laws cannot form the basis for antitrust liability regardless of any injury to truckers:
[46] Id. at 143-44, 81 S.Ct. at 532-33.[29] [47] The Supreme Court gave two reasons for its decision. First, to the extent that state government has the power to restrain trade, a contrary holding would be in direct conflict with the state action doctrine. Id. at 137 and n. 17, 81 S.Ct. at 529 and n. 17. Second, allowing such conduct to establish Sherman Act liability might substantially impair First Amendment rights to assemble and to petition the government. Id. at 137-38, 81 S.Ct. at 529-30. [48] When the Supreme Court decided Pennington four years later, it expanded Noerr to include efforts to petition the executive branch and broadened the scope of protected behavior. 381 U.S. at 669, 85 S.Ct. at 1593. The Noerr doctrine, said the PenningtonIt is inevitable, whenever an attempt is made to influence legislation by a campaign of publicity, that an incidental effect of that campaign may be the infliction of some direct injury upon the interests of the party against whom the campaign is directed. . . . To hold that the knowing infliction of such injury renders the campaign itself illegal would thus be tantamount to outlawing all such campaigns.
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Absolute immunity from antitrust liability results where the restraint upon trade or monopolization is the result of valid governmental action as opposed to private action. Id. Further, where, independent of any government action, the anticompetitive restraint results directly from private action, the restraint cannot form the basis for antitrust liability if it is “incidental” to a valid effort to influence governmental action Id.
[50] The Court found that Allied’s efforts were not immune from liability because they were essentially commercial in nature and their political aspects were secondary.[32] It stated that “[w]hat distinguishes this case from Noerr and its progeny is that the context and nature of petitioner’s activity make it the type of commercial activity that has traditionally had its validity determined by the antitrust laws themselves.” Id. at 505, 108 S.Ct. at 1939. [51] Citing Allied Tube, Todorov v. DCH Healthcare Authority, 921 F.2d 1438 (11th Cir. 1991) and Hill Aircraft Leasing Corp. v. Fulton County, 561 F. Supp. 667 (N.D.Ga. 1982), aff’d, 729 F.2d 1467Page 1573
process” may not be immune. Id.[36]
[54] The Supreme Court and this circuit have never expressly considered the validity of what has been referred to as the commercial exception to the Noerr/Pennington doctrine and we are not required to do so now. We conclude that FPL’s conduct is protected under Noerr/Pennington and does not fall under any exception, commercial or otherwise. The district court’s rejection of Noerr/Pennington immunity because of a perceived commercial exception was in error. [55] Second, FPL has a constitutional right to petition its governing legislative bodies. FPL lobbied Commission to vot against constructing the separate transmission line; the Cogenerators lobbied Commission to vote for construction. FPL’s motivation to speak out against building the line is irrelevant.[37] It is obvious that FPL had a self-interest in protecting its energy customer base; to lose Hospital as a customer would have cost FPL thousands of dollars a year in lost revenues. The fact that this lobbying was in FPL’s commercial best interest is beside the point. City of Columbia, 499 U.S. at 380, 111 S.Ct. at 1354 (that a private party’s political motives are selfish is irrelevant). [56] The district court found it significant that FPL lobbied a legislative body for a specific purpose — construction of a transmission line — rather than passage of favorable legislation in general. That is not significant. The First Amendment protections of Noerr do not turn on whether one petitions for governmental action in general or for specific legislative action. Legislative lobbying is protected, “either standing alone or as part of a broader scheme itself violative of the Sherman Act.” Pennington 381 U.S. at 670, 85 S.Ct. at 1593; see also City of Columbia, 499 U.S. at 381, 111 S.Ct. at 1354. [57] In sum, we look to the conduct, not the intent or motivation behind the conduct. The fact that FPL had a pecuniary interest in the outcome of the lobbying or that the lobbying was for a specific purpose does not matter, it merely begs the question. And, suffice it to say that a circumstance might one day present itself that could amount to conduct not protected unde Noerr/Pennington as some sort of commercial exception. That is not the case here. We conclude that FPL’s conduct in lobbying the Commission against the construction of a separate transmission line is constitutionally protected under the Noerr/Pennington[58] V. CONCLUSION
[59] For the reasons stated above, under both the state-action and the Noerr/Pennington immunity doctrines, we conclude that FPL’s conduct concerning the Cogenerators is immune from antitrust liability in each of the areas of wheeling, rates, interconnection, and lobbying. We reverse the district court’s denial of FPL’s motion for summary judgment in these four areas. As this ruling does not entirely resolve the dispute before us, however, we leave all remaining issues for determination upon remand.
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