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Municipal Utilities Board of Albertville the City of Alexander City the City of Andalusia the City of Bessemer the City of Courtland the Utilities Board of the City of Cullman, Inc. The City of Decatur the City of Dothan the City of Evergreen the City of Fairhope the City of Florence the Utilities Board of the City of Foley the Fort Payne Improvement Authority the Electric Board of the City of Hartselle the City of Huntsville the City of Lafayette the City of Lanett the Electric Board of the City of Luverne the Electric Board of the City of Muscle Shoals the City of Opelika the Utilities Board of the City of Opp the City of Piedmont the City of Robertsdale the Scottsboro Electric Power Board the Utilities Board of the City of Sylacauga the City of Tuscumbia and the Utilities Board of the City of Tuskegee v. Alabama Power Company the Alabama Rural Electric Association of Cooperatives Dixie Electric Cooperative Covington Electric Cooperative, Inc. Marshall-Dekalb Electric Cooperative Southern Pine Electric Coop

Citations: 21 F.3d 384; 1994 U.S. App. LEXIS 11863Docket: 92-6268

Court: Court of Appeals for the Eleventh Circuit; May 23, 1994; Federal Appellate Court

Narrative Opinion Summary

This case involves an antitrust action initiated by multiple municipalities in Alabama against the Alabama Power Company and several rural electric cooperatives. The municipalities contested two state statutes, the 1984 and 1985 Acts, alleging they infringe upon the Sherman Act by facilitating agreements that allocate service territories and suppress competition in the retail electric market. The court previously applied the state action immunity doctrine, as interpreted in Parker v. Brown and California Retail Liquor Dealers Ass'n v. Midcal Aluminum, Inc., to evaluate the statutes. The case was remanded to determine if the necessary state supervision was present, a requirement of the Midcal test. The district court found the Acts satisfied the state supervision criterion, dismissing the municipalities' claims. Upon appeal, the agreements between various municipalities and electric entities were scrutinized, particularly regarding state approval under the 1985 Act. The court affirmed the district court's decision, interpreting the agreements as compliant with statutory requirements, thereby upholding state action immunity. The ruling underscored the necessity of legislative approval for customer allocations, consistent with the statutory framework and public interest considerations, resulting in the dismissal of the municipalities' case.

Legal Issues Addressed

Interpretation of Statutory Provisions

Application: The court confirmed that Section 37-14-36 applies to new agreements, indicating that legislative approval is necessary for customer allocations and ensuring compliance with the statute's language and intent.

Reasoning: The Alabama Legislature's approval is necessary for any customer allocations under the 1985 Act.

Legislative Approval of Anticompetitive Agreements

Application: The court upheld that the agreements between municipalities and electric entities were compliant with the 1985 Act's requirement for legislative review and deemed them in the public interest, thus affirming state action immunity.

Reasoning: The agreements' procedures for preventing duplication of electric distribution facilities are mandated by the State of Alabama.

Midcal Test - Requirement of State Supervision

Application: The second prong of the Midcal test examines state supervision over anticompetitive conduct, and the district court, upon remand, found that the necessary state supervision was present, leading to dismissal of the case.

Reasoning: Upon remand, the district court found that the necessary state supervision was present and dismissed the case, a decision now appealed by the Cities.

State Action Immunity Doctrine

Application: The court evaluated whether the Alabama statutes met the Midcal test criteria for state action immunity, ultimately finding that the legislative enactments satisfied the requirement of clearly articulating a state policy to restrain competition.

Reasoning: The challenged Acts met the first prong, as the Alabama legislature explicitly aimed to reduce competition in the retail electric market to avoid duplicating electric facilities.