HomeMy WebLinkAboutCC 1980-01-10 Discussion ItemHonorable Maurice A. Porte, Mayor, June 21, 1979
and Members oL the City Commission
;c e F, Knd::, Jt\
y Attorney
Muni.ciprll Antitrust Liability
Alter. (.,it;) of L;.ILoVutte . Louisi
Power & Light
You have asked the to examine the impnct of Cho recent U.S. Supreme
Court Case of City of LninVet:te v. Louisiana Potter & Light: i.lpon our
"exclusive lease agreements".
Essent:i.ally it kris been determined that a municipality cn;..lges in
monopolistic or nnti•-conlpetitive activity whenever it takes ;in action
that causes economic harm to some business unit or individual, p;:1r-'
titularly if the consequence of i.r.s action is to prefer one cc:.1nomi.c
unit over another. The Supreme Court has determined that ;a municipality
is not itself sovereign and has no immunity from antitrust legislation
of its on; it: only has the illlfnuni.ty that it derives from the S41:ate.,
Thus the City must show that it was authorised car directed b'.' the srn: e
to engage in the anti-co111pettLLVe activity involved. We i;lL:;lli' l il'l.L i L1V
point out ti)at the resolution of the legal question is very d:.LLLc'ult
because lower court `; have not:had rime to apply the mnnd;iLO of Lafayette
to factual sLtuatioils as they tllay r1L1St'.
An orgaliizatlinl has Hied n lawsuit ;tell((isl: the c Ly of tiot;ston. TeN;ls,
in' it:; upu1 ;l L i011. O i :1 public fnc 1. l 1 L j / ((1 1VCll t ].00 center known a:;
"The Sunsuit", where the city engaged an ;i;;(•nt' to hnndlu boOic1.iiv» for
the facility. The plaintiff alleges that the mslnner in which the
agent: handles bookins effectively denies ghee the opportnn i I.'_ t it
ntii.iv.c the facility, , which is the onl.'.' one in the ci.t:v of Ilotl:;full
which can accommodate Lc the large audiences which big u;l;0(: ;::;I;-; i c';I l acts
attract. This nt:tl0!) 1'1:; filed on i'larch 9, 1979, and of l•o!11:0L• there.
bras been no j ilcl i.0 i n l dctcruli rl0 t. i on of the question ;1;.; ro :..tether or
not.: the c.Lt_, ('il,!,;ts',cd L11 some i.lilperthis;;iblc antitrust netivit:_i.
1)(2 first exal;,i nu I01c: question, whet hi,r the Florida .dt nt uses show that_
the togi.:;l;iture iln; ever contemplated rh;it. muni.cipalit.ies should hu
perillittedI to grant "exclusive Lo%reuilicilt':;" to Llldivid;1:1is truer( the
i mpno t of t:I• agreement would 0rt M-;(' . }+(IMC cL:onom i c harm to a col'lp(• I, L c1 i' .
We hind no specific statutory authorization. tt. 11.i:; been
suggested that the broad grant of Beet( Rule powers would I,i;rniit:_.:;uch
discretion by the municipality. However, the fetter:1L court for the
Honorable Maurice A, Verve, Mayor,
and Members of the City Commission
e Two
June 21, 19-0
Eastern District of Virginia has indicated that even if the statutes
in. Sonia way evidenced that: the legislature might have contemplated
the anti -competitive activities involved, defendants have the burden
of showin beyond doubt that the 1eislatur-676-66E6fIT5Aated the an ti-
competitive activity. They must show that the legislature intended
the anti -competitive activity.
In order Lo clarify the question oE the intention of the legislature,
this office, along with .Mr. Clark Merrill, proposed a hill. to be
introduced in the last session of the Florida Legislature., which-.
would purport to cinriFy the question by having rhe state speciFically
authorize municipalities Lo regulate the use of public facilities.
Unfortunately, this legislation was not adopted and we are engaged •
in effort to have the matter re -introduced in December, 1979.
It does appear that the City has the discretion to prohibit the
schedulin of two or more events of a similar nature :it the satu
facility within Fourteen days before and fourteen.days atter each
other. This decision was arrived at in the federni case of Mut-dot:12;
v. City of JacsonviLle, et al. The court Found that it wns
Lo the operaLton ot dacksonville Coliseum that such n larc portion
oF the revenues not be jeopardized, hnd that to allow anyone else LO
also promote wrestiin, either before, after, or in between the
scheduled Thursday niht.: matches would h.e detrimental to the over-
all revenues and the populnrity of wrestltn itself. IL. there':orc.
appears that where the economic interest to thc city would be so
profoundly impncted by the conduct of similar events within Cl close
Lime period of each other at the same Facility, that the city has
the discretion Lo provide 1617"kliCf.rM6ii"--.--
.
Another 5i tna i ()I1 V.1nn..! C()1.11:t:; iMVC n pp 1.0 VCd r C Oi! 1.1 r
"monopoly" is where a "natural. monopoly" existsthat is, where n
market is so 1. i i. red t: t: i. t: is impos s i.h le to p roduc(! nnd c
the co:; p rod i.611 exc.: op I: by pi onL r,',c tmony,li o s up pty the
whole.demand. The court applied this formuLa Lo determine Lhat an
established operatin foollvALL Lenm mny he said to have a natural
monopoly in a particular ci.ty if that city cannot support two proles-
sionl Le:lms nder existin circumsrancos Tho nncirrd::.L lnw:: do nor.
regnixe nn c;;;;(!nLi.d1 C(Icilit_v be shared. !.;uch sharin:,, would be
imprneticat or would inhibit the dufundanLslabiliLy Lo serve its
customers adequateLy.
Honorable Maurice, A. Ferre, MaYor, rage Three
and Members of the City Commission June 21, 1979
Again, however, the court, in Hecht v. Pro-Foorhall, Inc., indicated
that when, in an antitrust case under the Sherman Act, a defendant
seeks to avoid the charge of monopoliation by asserting that it has
a natural monopoly owing to the market's inability to support two
competitors, the defendant and not the plaintiff bears the burden of
proof on that score.
It, therefore, appears that even where certain monopolistic activities
are permitted under the Sherman Act,.the burden rests with the defendant,
in our case theCity of Miami, rather than the plaintiff in order to
show that there is no violation. Of course, we would he particularly
concerned wLch the shifting of the burden where ordinarily the.casee
must be proven by the plaintiffs.
In the LaFayette case, ,the U.S. Supreme Court: rejected all arguments
propounaj6 by Ihc cities which would preclude appltention el federal.
antitrust laws to municipal corporations. In considerin the public
policy argumentsprusented by the cities, Mu. Ju:;LicO fwennan noted
that they must be considered in .1tght of,"rhe presumption against
imp lied CO 1os tot-17; From Cover.ir,e und el: the nil r s " . Un i.•!;
the cities could .demonstrate that "there were count:el:veiling policies
which were snffictently weighted co overcome the presumption," the
cities' immunitv ar,,uments must fail. .
Onr problem is further articulated by : statement which appears in
.the national quarterly on local government law, by
Hugh F. Bangasser:
a munteipaiicy cannot point to a clear
articulation of state policy which direLits_
the municipality to engage 1.0 anti-compecittve
eonduct,.tt is unlikely that a court will
cloak the munielpattLy':; conduct wirh not trust: immuntcy ... whether or nor broad tij of managerial authority Lo municipalities
will provide sufficient cty 1. insnlacton Ito: a
municipaliLy providing milnopuly puhlic.service
or granrtng exclu:;ivo conLract:-; lor L tc provi.:;ion
oC service is open for question."
r-
Honorable Maurice A. Terre, Mayor,
and Members a I' L.11c City Commission
Page l'c)t_Ir
,lttiic ' 1 , 1979
All of the commentators have suggested that municipalities follow a
prudent course in the award of "exclusive contracts" bc'cau:ie the conse-
quences have a potential of being d.Lre. For example, the mere1:i.li.ng
of an antitrust claim may restrict a municipality's ability to generate
revenue through bond issues. The possibility that a plaintiff could
obtain a sub: tan L-ia L monetary judgment would be noted in the opinion
of bond counsel, and thus would foreseeably limit the marketability of
the bonds.
Jonathan Rose, Professor of Law at Arizona State University, has pointed
out that it is important Lo understand the aL:trncLLvcness of the anti-
trust Laws to anyone who has suffered economic lilrtll because of the action
of a rnunicipnl.i1'', The attractive feature; of the antitrust laws include
treble (triple) damages, attorneys' fees, a federal forum, a favorable
body of substantive law, and a variety. of procedures i.i1Vo1..v'i.ng subjects
such as service at: proccsL;, stnt:ute of limitations, and measurement: of
damages that are specifically designed to assist p1a1nLLLi:s. Professor
Rose Slit;; csL:.; Lhat: municipalities out Lo be more c:luLious 11)out pursuing
local governme_ilt activity that has anti -competitive effects. More
specifica1.1.y, he :a:,ci, it: seems prudent for a slate oi: local government
to consider the compLLiLiVe impact of the L\•1pes of governmental acLi.vi-
Lies which we have described.
in summary, 1. would respec L Ci11 Lv sl.le ; t: flint the City of :•I Ln;^1. refrain
from Lhe ; r:111Li.nl', ol. "e:•:ctu ;Lve'', loner term aS',rt:el;i(.'nts whose_ ei tC'cL
would be Lo deprive some economic unit ut: an upport:uni.Lv Lo con;:)uLc,
unless Lhe City first C'nLcrtai.ris coi;it)eLifLo11 for the opportunity to
pr(fViCte the service. More specifically, there doe: not appeal: to exist
a precedent for Lhe granting of an exclusive agreement which would pre-
clude :l cot. I.tor I roil t'il(' use or ;in add LL1 oi1;11, illllil i (: i.p:i 1, i :1c i 1 .1 LV H1'
the .,ai ;e pu :1,1:;e , a:, where the city would provide.' a "buffer" er which would
disallow a summer ;.)ci:l1: show it Llio „:i r i Ill' Stadium .:here there is a boat
,shot:' Ilc)l. :;(:llt•duLed for the Dinner Kev Exposition HIall.. This hilCl(.'1: ilia'/
be pci:mi:: ; LI) I e , 1)'11. I would remind you r.h1 t. Lhe burden could shift to the
L'iL:' of i1La;ll Co require ;i showin Lhrlt. the market would not sustain
Coiiip(!L.LLLVe I) 'a1: :;Ilut:':; within Lhe 50111e L:LI;I(` span.
1'111aL1. t. concur In Professor Rose's ,till' :e,;t'1OIl that competition pro-
vides many 1)111;1Lt.: benefit:,. LL c_urLni111• oti'',hL not to be (li_:;penned with
Lur the i;ai:c c)f convenience or in order to accoI111;ic)date private economic
interests, and LC compeLi.t:Lon 1.:; to be 'v(:Ll:i(fell h`.' :;omc: oLher t)lii)LIc
value, staLc and local ofLi.cLals ou"ht: Lc.) 1.iuwre Lh:iL i)rct;;;c)Ll.ull of these
other values prodn(e benefits that outweigh the anti -competitive ,c:cn;t-i, .
Their duties as public officials require Such an inctui.r: and assessment.
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1111111111111.1.11
TO.
FROM
CITY Or M1,
INrCi2•oFFICC ME
Honorable Maurice A. i'errc, Mayor,
and Members ,)f the City Commission
c -go F. .i�'�o::,
Ci'-y Att,erncy
t) A 11.
November 21, 1979
ru.F
suujI:u1 Municipal Anti -Trust Liability
17rrt NCt.S
This is a folio, -up and translation of my memorandum to you, which
was dated aa.te 21, 1979, and is attached.
Succintly, it appears that the City of Miami has the power to determine
that an individual may be entitled to a "buffer zone" or "protection
p?�iod" surrounding events held at a municipal facility. If you
would choose to do so, you must make the following findings upon
the record in order to avoid liability under the various anti-trust
acts.
(1) You must declare that the City of Miami has been
granted immunity from the anti-trust acts by virtue of its Home Rule
status.
(2) You must find that the holding of two events at two
separate facilities within the City'of Miami, and within a'certain
time period, would result in severe economic harm TO THE CITY. •
(3) You must find and determine that the market cannot
beat two events of the same nature within a certain time period.
I must advise you that there appears to be no legal precedent for
providing "buffer zones" or "protection periods" where two separate
facilities are involved.
Since two similar marine -related events have been hold at two separate
facilities within the City in the past, the potential adverse impact
upon the City may be measured.
I must further advise you that Section 4 of the Clayton Act provides
that:
"Any person who shall be ,injured in his business or
property by reason of anything forbidden in the anti-
trust laws ... shall recover three -fold. the damages
by him sustained."
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Enclosure
7
ri,
lltiie diver
Commerce Assoclallon, 9uc.
8281 N.E. 2nd Avenue / Little River / Miami, Florida 33138 / 754.7444 - 754-1444
November 9, 1979
Maurice Ferre, Mayor
City•of Miami
3500 Pan American Drive
Miami, FL 33133
Dear Mayor:
Thank you so much for attending our Oktoberfest as
well as our Groundbreaking Ceremony for Commerce
Park.
The support the City of Miami extended to Little
River is in a large part the reason for our success-
ful festival.
Little River is grateful for the support and encour-
agement they receive from both the City of Miami.and
Dade County. The redevelopment along N. E. 2nd Ave.
and 79th Street is the product of this government
action.
Once again we would like to come before the City
Commission after December 10 and make our thank you
presentation. We will await word as to the time and
date you select for our appearance.
Congratulations on your recent victory and I feel
confident that you will continue to be the "Mayor
of all Miami."
Very truly yours,
1t.e '--
Annette Eisenberg
Program Coordinator
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