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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. bbb 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." bbb 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 AE/mh / / to. f ' 2, 2'