Bona Law Tells Ninth Circuit State Action Immunity Doesn’t Apply to California Municipalities in Ambulance Antitrust Case

Bona Law attorneys argued that twelve Orange County, California cities and a private ambulance company (Care, Inc.) are not immune from the antitrust laws for monopolizing ambulance markets in a brief submitted to the U.S. Court of Appeals for the Ninth Circuit November 1, 2017.

Last year, Bona Law filed lawsuits on behalf of AmeriCare MedServices, Inc. against the cities and Care alleging monopolization and agreements to restrain trade among the defendants. You can read more about the lawsuits here and here. The defendants moved to dismiss, arguing that a state law allowed them to exclude competing providers for the markets. The law, the California EMS Act, actually requires competition under most circumstances, and places all control to implement the EMS plan in the hands of county and state authorities. Nevertheless, the cities argued that the legislature intended to immunize local governments from federal antitrust laws, and the district court agreed. In addition, the district court held that Care’s activities were protected under the Noerr-Pennington immunity, which applies to conduct protected by the First Amendment. It further held that Americare failed to plead sufficient facts to show that the defendants’ restraints “substantially affected” interstate commerce, which it said was a jurisdictional requirement.

In its appeal to the Ninth Circuit, AmeriCare argued the district court should be reversed for the following reasons:

  1. The municipal appellees never qualified for the limited exception to the EMS Act’s general policy in favor of competition. The exception, California Health & Safety Code Section 1797.201, did not apply to the cities in question, and an entity that is not authorized to displace competition cannot claim immunity. Moreover, even if the exception did apply, it only authorized the cities to provide ambulance services, not to exclude others from doing so.
  2. After North Carolina State Board of Dental Examiners v. FTC, it is unclear that municipalities remain always exempt from the “active supervision” requirement for state action immunity that was established in Hallie v. Eau Claire. In this case, the city appellees compete in the same market they purport to regulate and should be required to show that they are actively supervised by the state itself. Moreover, Care must show active supervision because there is no “derivative immunity” as the district court held.
  3. Even if the state-action immunity otherwise would apply, the Ninth Circuit should formally recognize and adopt the “market-participant exception” to the immunity, a question the Supreme Court has expressly left open.
  4. AmeriCare pled sufficient facts to show foreclosure of specific healthcare markets to create an inference that the restraints substantially affected interstate commerce. Moreover, the substantial effects requirement is not jurisdictional, but a substantive requirement for an antitrust claim.
  5. Noerr-Pennington immunity does not apply to Care’s market conduct. If the district court’s decision stands, any monopolist who obtains its position by exclusive contracts with government entities are protected by Noerr-Pennington.

The California Emergency Medical Services Authority submitted an amicus curiae brief in the case November 7, 2017 arguing in favor of AmeriCare’s argument. Specifically, EMSA argued that Section 1797.201 does not apply to the cities, and that what the cities are doing is contrary to the state’s intent. This is significant because EMSA is the state agency charged with implementing the EMS Act. Since the state-action immunity concerns the state’s intent, it is hard to imagine how the Ninth Circuit could possibly find that the defendants were acting pursuant to a clearly articulated policy to displace competition when the state itself says they were not.

The case is AmeriCare MedServices, Inc. v. City of Anaheim et al., Case No. 17-55565. The cities and Care are currently due to respond January 2, 2017.