Academic journal article Journal of Corporation Law

State Action Immunity, Municipalities, and the Unique Case of Eminent Domain

Academic journal article Journal of Corporation Law

State Action Immunity, Municipalities, and the Unique Case of Eminent Domain

Article excerpt

I. INTRODUCTION

In Pennsylvania v. Susquehanna Area Regional Airport Authority (SARAA I) , the U.S. District Court for the Middle District of Pennsylvania held that the Susquehanna Area Regional Airport Authority (SARAA or "the airport authority"), a municipal authority operating under a broad enabling act, may exercise its power of eminent domain to condemn a privately owned airport parking service in direct competition with its own parking service without being subject to suit for violations of federal antitrust law.1 The private lot at issue in SARAA I was the airport authority's sole competitor for parking services provided to travelers flying in and out of the Harrisburg International Airport (HIA).2 The condemnation will therefore provide SARAA with a monopoly over parking services at the HIA. Despite acknowledging the flagrantly anticompetitive effect of SARAA's conduct,3 the district court found that SARAA was exempt from antitrust liability under the state action doctrine.4 Responding to the plaintiff's claim that SARAA was acting with an improper motive-namely, to monopolize the parking services market rather than to serve the public interest-the court suggested that eminent domain proceedings were the appropriate forum for addressing motive.5

Eight months later, SARAA was once again in front of the district court, this time for allegedly entering into anticompetitive, exclusive dealings contracts with a taxi service.6 However, this time the court found that state action immunity did not exempt the airport authority from antitrust liability.7 In each case, SARAA acted pursuant to the same enabling act, although in SARAA I, the airport authority exercised its grant of eminent domain,8 and in SARAA II, the airport authority exercised its power to execute contracts convenient for carrying on its business.9 The court distinguished the two cases on the grounds that the exercise of eminent domain will inevitably result in the displacement of competition, whereas anticompetitive effects are not the logical result of the state grant of freedom to contract.10 This distinction was dispositive because, in order to receive state action immunity, anticompetitive conduct by a municipality must be the foreseeable result of a clearly articulated state policy.11

SARAA I highlights the ease with which a municipal actor may receive state action immunity. Taken alone, SARAA I demands a reassessment of the current state action doctrine. Taken together with SARAA II, SARAA I demonstrates that eminent domain is a particularly problematic issue within the greater discussion regarding municipalities and antitrust exemption. As the SARAA I court noted, the condemnation of land well-suited for a particular purpose, project, or facility obviously has the potential to negatively impact market competition.12 Because the likelihood of competitive fallout is so obvious, the exercise of eminent domain should presumably meet the foreseeability test every time, absent clear expression of a contrary intent on the part of the legislature. The outcome of SARAA I-the apparent monopolization of a market with little or no justification-and the dubious motives underlying the airport authority's activities in that case raise the question of whether this is a desirable state of affairs.

This Note offers a reassessment of the state action doctrine as it applies to the anticompetitive conduct of municipal actors like the airport authority in the SARAA cases, with particular focus on the exercise of eminent domain. Part II of the Note briefly outlines the fundamentals of federal antitrust law before turning to a discussion of the creation and development of the state action doctrine. Part II.D provides an overview of the law of eminent domain as well, for use in determining whether the principles of that law adequately address the concerns raised by cases like SARAA I. Part III then proceeds to analyze the relative interests served and sacrificed by a lenient exemption doctrine, addressing and comparing various reforms that have been proposed from the time state action began resembling its modern day form. …

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