Bona Law Defends Federal Antitrust and Competition Policy from Municipal Overreach

Last fall, Bona Law attorneys Jarod Bona and Aaron Gott filed twelve antitrust lawsuits on behalf of AmeriCare MedServices, Inc. against Orange County municipalities and CARE Ambulance Service, Inc. for monopolizing the market for ambulance services. Each city and CARE filed motions to dismiss, as expected, citing the state-action immunity as the primary defense for their anticompetitive conduct. The motions argue that the State of California’s EMS Act allows for anticompetitive conduct, thereby immunizing the defendants from federal antitrust laws. Many of the motions also argue that even if the immunity does not apply, the federal courts should stay out of it anyway.

Mr. Bona, Mr. Gott, and Christopher Stiner filed their oppositions earlier this month. The oppositions argue that the cities and CARE misinterpret the EMS Act in an overly generalized, self-serving way; the EMS Act actually favors competition and, in any event, it gives the power to oversee EMS operations to counties, not municipalities. You can read a representative sample of our oppositions to the city motions here, and our oppositions to CARE’s motions here.

The oppositions explain that the federal antitrust laws are a “national policy in favor of competition” that has been consistently reaffirmed by Congress for over a century. This supreme law of the land only yields to states, and even then only to the extent that the state seeks to regulate as an act of government. Municipalities and other non-state actors are not sovereign, and do not independently qualify for any immunity from the antitrust laws. They are only immune to the extent they act pursuant to a clearly articulated state policy to displace competition and are actively supervised by the state itself (and are not subject to the market-participant exception to state-action immunity).

Over the last two decades, the U.S. Supreme Court has shifted away from its more liberal applications of the state action immunity. In FTC v. Phoebe Putney Health System, Inc., the Court held that a state law allowing local governments to “acquire” hospitals did not satisfy the clear articulation requirement because the power to acquire does not also mean the power to monopolize. (Jarod Bona filed an amicus curiae brief in Phoebe Putney ). In North Carolina Board of Dental Examiners v. FTC, the Court determined that state boards that are dominated by active market participants, such as a dental board comprising dentists, are not exempt from the active supervision requirement, explaining that state supervision is vital where non-state actors with commercial interests have been empowered by the state. (Jarod Bona and Aaron Gott filed an amicus curiae brief in NC Dental).

The municipalies’ and CARE’s arguments for a broad application of the state-action immunity were thus misplaced, the opposition briefs argued. Not only had the state legislature set forth a policy in favor of competition, the limited circumstances under which it excepted certain entities to restrain competition in limited ways simply did not apply to the cities.

Moreover, the opposition argued that the court should deny the cities’ and CARE’s request to abstain from hearing the case under the Burford abstention doctrine because the case involves federal antitrust law, which is within the exclusive jurisdiction of the federal courts and because none of the factors in favor of abstention were present, such as a “complex state administrative process” and the existence of a “specialized state court system.”

District Judge Josephine Staton is scheduled to hear arguments on the cities’ motions March 3 at 2:30pm and CARE’s motions on April 7 at 2:30pm in Courtroom 10A at the U.S. District Court in Santa Ana.