-
USCA1 Opinion
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 92-2218
TRI-STATE RUBBISH, INC., ET AL.,
Plaintiffs, Appellants,
v.
WASTE MANAGEMENT, INC., ET AL.,
Defendants, Appellees.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Gene Carter, U.S. District Judge] ___________________
____________________
Before
Breyer, Chief Judge, ___________
Torruella and Boudin, Circuit Judges. ______________
____________________
Ralph A. Dyer for appellants. _____________
Michael A. Nelson with whom Emily A. Bloch, Nicholas S. Nadzo and _________________ ______________ _________________
Jensen Baird Gardner & Henry were on brief for appellee Mid-Maine ______________________________
Waste Action Corp.
Robert S. Frank with whom Carl E. Kandutsch and Verrill & Dana ________________ _________________ _______________
were on brief for appellees Waste Management, Inc., Waste Management
of Maine, Inc., Consolidated Waste Services, Inc. and Consolidated
Waste Transport, Inc.
John J. Wall, III with whom Thomas F. Monaghan and Monaghan, ___________________ ___________________ _________
Leahy, Hochadel & Libby were on brief for appellee City of Auburn. _____ _________________
____________________
July 13, 1993
____________________
BOUDIN, Circuit Judge. The complaint in this case ______________
charged that a number of entities, public and private, were
seeking to monopolize the waste disposal business and
otherwise acting in violation of federal and state law. The
district court dismissed the complaint for failure to state a
claim. We affirm the district court with one exception: as
to the predation claims against the private defendants, we do
not think that state action immunity has been made out on
this record, and therefore remand those claims for further
proceedings.
I. THE BACKGROUND
This case is one of several in which state and local
communities have taken measures to cope with their waste
collection responsibilities, and private haulers have been
adversely affected and responded with antitrust suits. The
cases vary, and in this one the history is tangled and the
claims numerous. In describing the facts, we take the
allegations of the complaint as true, as is customary in
reviewing dismissals for failure to state a claim. See ___
Watterson v. Page, 987 F.2d 1, 3 (1st Cir. 1993). _________ ____
Maine has in force statutes that give local communities
substantial authority over local waste collection and
disposal. Under this legislative umbrella, the City of
Auburn and eleven other municipalities formed in 1986 a non-
profit, non-stock corporation to assist in waste disposal.
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The entity--Mid-Maine Waste Action Corporation ("MMWAC")--was
then mandated to construct a facility to burn municipal waste
and derive electricity from the process. Maine law expressly
authorizes municipalities to cooperate in waste disposal
projects, Me. Rev. Stat. Ann. tit. 38, 2201, and provides
for interlocal agreements to organize public waste disposal
corporations to own or operate facilities. Id. 1304-B(5). __
MMWAC issued over $42 million in bonds to construct a
waste-to-energy facility. The bonds were to be funded
through so-called "tipping fees," customarily charged to
those who dispose of waste at a landfill or other disposal
facility, and through the revenues from the sale of the
electricity. To secure the quantity of waste needed to
operate the facility economically--that is, at a high
percentage of its capacity--the MMWAC municipalities enacted
flow control ordinances. These local laws, authorized by Me.
Rev. Stat. Ann. tit. 38, 1304-B(2), required the delivery
of all solid waste generated within each municipality to
MMWAC. Each municipality also contracted with MMWAC to
deliver to it the solid waste generated in the community,
paying MMWAC whatever tipping fee was required to produce
revenues to service its debt.
Because the MMWAC incinerator-generator facility would
not be ready before 1992, MMWAC provided in the meantime for
an alternative method of disposing of the waste it received.
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For this interim period, MMWAC contracted with two related
entities, Consolidated Waste Services and Consolidated Waste
Transportation (collectively, "the Consolidated companies")
to operate a transfer station near the MMWAC construction
site. A transfer station is a collection point at which
waste may be processed or repackaged before being sent to its
final destination. MMWAC agreed to pay the Consolidated
companies $66 per ton to receive the waste delivered and to
dispose of the waste until the MMWAC incinerator was ready to
operate.
MMWAC's initial tipping fee was set at $75 per ton. It
is common in waste collection for municipalities to collect
residential trash themselves or to contract out this function
but to require commercial businesses to contract directly
with private haulers for their trash removal facilities.
Under the municipalities' agreements with MMWAC and under the
local flow control ordinances, private trash haulers in the
twelve municipalities and the municipalities themselves were
effectively required to deliver their trash to the transfer
station and pay the $75 per ton tipping fee to MMWAC.
Waste Management of Maine, Inc. is an operating
subsidiary of Waste Management, Inc., one of the largest
waste collection and disposal firms in the nation. The
operating subsidiary provides trash collection in various
Maine towns. In July 1990, after the transfer station
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agreement between MMWAC and the two Consolidated companies,
Waste Management, Inc. acquired the two Consolidated
companies; and one of the two may thereafter have been merged
into Waste Management of Maine. We refer to all four
companies, collectively, as "Waste Management."
Tri-State Rubbish, Inc., a competitor of Waste
Management of Maine, is also in the business of collecting
and disposing of commercial trash, including waste generated
by various customers in Auburn. Its affiliate, Recycling
Unlimited Services Corp., Inc., processes waste and recovers
from it recyclable commodities. Gary Hart is the principal
in both businesses. In 1990, Tri-State Rubbish declined to
deliver to the Consolidated transfer station all of the waste
collected by Tri-State Rubbish in Auburn. Tri-State
Rubbish's position was that waste capable of having recycled
commodities extracted from it was not covered by the local
flow control ordinance.
Auburn brought suit against Tri-State Rubbish in a Maine
state trial court in December 1990 to enjoin it from refusing
to deliver all of its Auburn waste to the transfer station.
In July 1992, the court rejected Tri-State Rubbish's
interpretation of Maine law and granted an injunction in
favor of Auburn. City of Auburn v. Tri-State Rubbish, Inc., _______________ ______________________
No. CV-90-561 (Me. Sup. Ct., Androscoggin County, July 20,
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1992). That case, we are told, is now on appeal to the Maine
Supreme Judicial Court.
MMWAC's incinerator-generator began operating in early
1992 and almost at once MMWAC found that the waste produced
in the twelve municipalities was not enough to keep the new
facility operating at an optimal level. This led MMWAC to
seek additional waste from outside the member towns; it did
so by offering a reduced tipping fee, allegedly $45 to
municipalities who were not members of MMWAC and as low as
$28 to Waste Management of Maine for its delivery to MMWAC of
waste collected outside the twelve communities. These
reduced fees were not made available to Tri-State Rubbish.
In September 1992, Tri-State Rubbish, Recycling
Unlimited, and Hart (collectively "Tri-State") began the
present suit in federal district court. The defendants were
Auburn, MMWAC, and the four Waste Management companies: Waste
Management, Inc., Waste Management of Maine, and the two
Consolidated companies. Based on the events described above,
the complaint asserted federal and state antitrust claims, a
claim of tortious interference (by Waste Management) with
Tri-State's contractual relations, and claimed violations (by
Auburn) of 42 U.S.C. 1983 and provisions of the U.S.
Constitution.
The defendants in this federal action moved to dismiss
the complaint under Fed. R. Civ. P. 12(b)(6) for failure to
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state a claim upon which relief may be granted. The district
court granted the motions, concluding that the antitrust
claims were barred by so-called "state action" immunity; the
bases for dismissing the other claims are more conveniently
described below as the separate claims are discussed. Tri- ____
State Rubbish, Inc. v. Waste Management, Inc., 803 F. Supp. ____________________ _______________________
451 (D. Me. 1992). This appeal followed.1
II. THE FEDERAL ANTITRUST CLAIMS
A half century ago the Supreme Court determined, in
Parker v. Brown, 317 U.S. 341 (1943), that Congress had not ______ _____
intended the federal antitrust laws to apply to trade
restraints or monopolies imposed by state governments.
Although the antitrust laws aim at competitive markets, the
Court in Parker recognized that governments often restrict ______
competition for public purposes. The actions of state
governments, no less than those of the federal government
itself, were deemed not to fall within the constraints of the
antitrust laws.
After a certain amount of wobbling, it has become
settled that municipalities enjoy the protection of the
Parker doctrine if, but only if, the conduct in question is ______
____________________
1Although both sides have captioned their briefs to show
"Tri-State Rubbish, Inc., et al." as the plaintiffs-
appellants, the notice of appeal names only Tri-State
Rubbish, Inc. as the appellant. Our caption and other
references to Hart and Recycling Unlimited are without
prejudice to any consequences that may flow on remand from
the way the notice of appeal was framed.
-7- -7-
of a kind authorized or directed by state law. Town of _______
Hallie v. City of Eau Claire, 471 U.S. 34 (1985); Fisichelli ______ ___________________ __________
v. Town of Methuen, 956 F.2d 12 (1st Cir. 1992). In general _______________
this immunity is not defeated by claims that the municipality
"conspired" with a private party, City of Columbia v. Omni ________________ ____
Outdoor Advertising, Inc., 111 S. Ct. 1344 (1991), or that ________________________
the municipality made some error under local law.
Fisichelli, 956 F.2d at 14. __________
Count I. In count I of its complaint, Tri-State ________
contends that in violation of the Sherman Act, 15 U.S.C.
1-2, Auburn and MMWAC have sought to monopolize and restrain
trade in the waste disposal business in Auburn and the other
eleven municipalities. The gist of the claim, as elaborated
in Tri-State's brief, is simple: under the local ordinances,
all solid waste generated in the twelve municipalities must
be turned over to MMWAC or its designee. Thus the waste
disposal business in these locations, including recyclable
materials, is within the sway of one entity, MMWAC.
With a couple of caveats, Tri-State concedes that state
action immunity is available as to count I if the Maine
legislature empowered municipalities to engross all solid
waste including waste that might be recycled. But it argues
that Maine's policy is to promote the recovery of recyclable
commodities from waste before the residue is burned for
electricity. It derives this priority from a declaration of
-8- -8-
policy in the Maine statute preceding the specific grants of
authority. Me. Rev. Stat. Ann. tit. 38, 1302, para. 2. It
urges us to read the Maine legislation to exclude such
recyclable waste from the authorization that allows
municipalities to control the disposition of solid waste.
The Maine statute explicitly permits a municipality to
require that "solid waste" generated within its boundaries be
delivered to "a designated disposal or reclamation facility,"
id. 1304-B(2), reclamation includes the generation of ___
electricity, id., and solid waste is defined to include ___
"useless, unwanted or discarded solid material." Id. 1303- __
C(29). The statutory definition of solid waste goes on to
say that "[t]he fact that a solid waste or constituent of the
waste may have value or other use or may be sold or exchanged
does not exclude it from this definition." Id. This final ___
clause pretty much disposes of Tri-State's argument.
Statutes or ordinances similar to those involved in this
case exist elsewhere. Tri-State cites us to several that
have been construed not to reach waste from which recyclable
commodities could be extracted. Yet the case on which it
principally relies concerned an authorizing statute that
excluded recyclables.2 By contrast, the definitional phrase ________
____________________
2In Waste Management of the Desert, Inc. v. Palm Springs ___________________________________ ____________
Recycling Center, Inc., 11 Cal. Rptr. 2d 676 (Cal. App.), ______________________
petition for review granted, 13 Cal. Rptr. 2d 850, 840 F.2d ____________________________
955 (1992), the California statute reserved the right of
anyone "to donate, sell or otherwise dispose of his or her
-9- -9-
in the Maine statute (quoted at the end of the last
paragraph) explicitly includes recyclables in the waste that
is subject to municipal control. The district court's
reading of the Maine statute follows its plain language, 803
F. Supp. at 456, and comports with the reading of the Maine
state court in the injunction action against Tri-State. City ____
of Auburn, supra. We see no error in the district court's _________ _____
interpretation.
Tri-State also objects to the district court's ruling
that MMWAC should be treated as a municipality for state
action purposes. As a private actor, Tri-State argues, MMWAC
must show that it is subject to state supervision pursuant to
California Retail Liquor Dealers Ass'n v. Midcal Aluminum, ________________________________________ _________________
Inc., 445 U.S. 97 (1980). Midcal, building upon statements ___ ______
in Parker and later cases, made clear that state action ______
immunity will extend to private actors only where they are
subject to adequate official supervision. The state, in
other words, may take anticompetitive measures itself or
authorize its municipalities to do so; but it may not license
private restraints unless the private parties are themselves _______
regulated.
Passing the question whether the conduct challenged in
count I is that of MMWAC (as opposed to the municipalities),
____________________
recyclable materials" and of any private company to contract
with a private waste hauler to remove segregated recyclable
materials. 11 Cal. Rptr. at 683-84.
-10- -10-
we think that MMWAC's status is that of the municipalities.
MMWAC's mission, waste disposal, is a traditional local-
government function. By statute MMWAC's directors must be
elected by municipal officers and are themselves municipal
officers. Me. Rev. Stat. Ann. tit. 38, 1304-B(5). The full
faith and credit of the municipalities may be pledged in aid
of its operations. Id. Patently MMWAC is the creature of __
its member municipalities and enjoys their status. See ___
Interface Group, Inc. v. Massachusetts Port Authority, 816 ____________________ _____________________________
F.2d 9, 13 (1st Cir. 1987).3
Counts II, III and III-A. These counts, which include _________________________
Tri-State's remaining federal antitrust claims, present a
different set of issues. In count II Tri-State first
challenged as a restraint of trade and attempted
monopolization the agreement between MMWAC and the
Consolidated companies. As a consequence of the interim
arrangements, Tri-State argues that Waste Management of
Maine was able to offer "predatory" prices to customers in
Auburn and other MMWAC municipalities. In Tri-State's view,
the $66 per ton payment by MMWAC to the Consolidated
companies for disposing of the waste allowed their affiliate
____________________
3The only participants named in count I are the
municipalities and MMWAC. Since their conduct is authorized
by statute, the state action doctrine applies. Contrary to
Tri-State's claim, municipalities (or their
instrumentalities) engaged in state-authorized conduct are
not themselves required to be further supervised by the
state. See Town of Hallie, 471 U.S. at 47. ___ ______________
-11- -11-
Waste Management of Maine effectively to reduce its $75 per
ton tipping fee to $9 ($75 less $66) and thus steal away Tri-
State's customers.4
Counts III and III-A concern the activities of Waste
Management of Maine in other non-MMWAC communities. This
competitor, says Tri-State, has been favored by MMWAC with a
low tipping fee ($24 per ton), not available to Tri-State,
for "foreign" waste delivered from outside the MMWAC
municipalities to the new incinerator-generator.5 As a
result, Tri-State has lost customers outside the twelve
municipalities to "low ball" prices. Further, the customers
are "lock[ed] up" by exclusive dealing contracts and supplied
with trash containers that can be used only for Waste
Management trash.
In analyzing these claims, the district court
distinguished between MMWAC and the Waste Management
companies. As to the former, the court pointed out that the
participating municipalities were empowered by the Maine
____________________
4Tri-State's assertion of a $9 per ton "net" tipping fee
appears to be faulty economics. The $66 per ton payment to
the Consolidated companies was to cover the cost of receiving
and disposing of the waste. Whether or not the cost to the ____
Consolidated companies was actually $66 per ton, it is not
likely to have been zero.
5The record does not explain why, given MMWAC's need for
fuel, it would make sense for MMWAC to offer the $24 tipping
fee exclusively to Waste Management of Maine. While we
accept the allegation as true for purposes of this appeal, we
note that MMWAC's brief denies that this is what happened.
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statute to control completely the collection and disposition
of waste generated within their communities, dealing if they
chose to do so with a single entity. 803 F. Supp. at 458;
Me. Rev. Stat. Ann. tit. 38, 1304-B(4). Thus, assuming
that MMWAC's interim arrangements with the Consolidated
companies favored the Waste Management companies over Tri-
State, MMWAC was protected by the state action doctrine.
As to the conduct in Counts III and III-A, the district
court noted that the Maine legislature clearly contemplated
that municipalities could buy waste from other municipalities
to make up any shortfall. 803 F. Supp. at 459; Me. Rev.
Stat. Ann. tit. 38, 1304-B(4-A)(B). A reduced tipping fee
is merely one way of "buying" such waste. Nothing in the
authorizing statute says that the same price must be offered
to everyone; on the contrary the need for long-term fuel
commitments, recognized elsewhere in the statute, see Me. ___
Rev. Stat. Ann. tit. 38, 1304-B(4), suggests that
arrangements with one or a few suppliers were entirely
foreseeable. We agree with the district court that MMWAC's
alleged exclusive offer of the $24 tipping fee to Waste
Management of Maine for foreign waste was authorized by
statute and is protected by the state action doctrine.
A different, and more difficult, issue is presented by
Waste Management's claim that it too is protected by the
state action doctrine. Tri-State objects that Waste
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Management, at least, is fully subject to the Midcal ______
requirement that it be supervised before any of its actions
can be protected. The district court agreed that supervision
is required. But it found that municipal, as opposed to
state, supervision is sufficient. It further held that this
obligation was satisfied by MMWAC's obligation, undertaken in
its contracts with its municipality members, to comply with
all pertinent laws. 803 F. Supp. at 461.
We agree with the district court's view, supported by
the greater weight of authority, that municipal supervision
of private actors is adequate where authorized by or implicit
in the state legislation. Although there is some precedent
to the contrary,6 we share the view of the Eighth and Ninth
Circuits, endorsed by the leading antitrust treatise, that
municipal supervision is adequate.7 As Professors Areeda
and Hovenkamp note, "it would be implausible to rule that a
city may regulate, say, taxi rates but only if a state agency
also supervises the private taxi operators." Antitrust Law, _____________
supra n.7, at 197. _____
____________________
6See, e.g., Riverview Investments, Inc. v. Ottawa ___ ____ _____________________________ ______
Community Improvement Corp., 774 F.2d 162 (6th Cir. 1985). __________________________
7Gold Cross Ambulance & Transfer v. City of Kansas City, _______________________________ ___________________
705 F.2d 1005 (8th Cir. 1983), cert. denied, 471 U.S. 1003 ____ ______
(1985); Tom Hudson & Assocs. v. City of Chula Vista, 746 F.2d ___________________ ___________________
1370 (9th Cir. 1984), cert. denied, 472 U.S. 1028 (1985); ____ ______
Savage v. Waste Management, Inc., 623 F. Supp. 1505 (D.S.C. ______ _____________________
1985); see also P. Areeda & H. Hovenkamp, Antitrust Law ___ ____ ______________
212.7c at 196-97 (Supp. 1992).
-14- -14-
At this point, our analysis of Waste Management's
position diverges somewhat from that of the district court.
As to any claim that Waste Management received favorable
tipping fees--whether through MMWAC payments to the
Consolidated companies or outright as to foreign waste--we
think "supervision" is not a requirement at all: the choice
to make such payments was that of MMWAC and its actions are
protected as state action. To treat the mere receipt of such
authorized payments as wrongful would undermine the Parker ______
protection afforded MMWAC and mistake the purpose of the
supervision requirement, which is to prevent the unregulated
licensing of private anticompetitive conduct. _______
This analysis disposes of the claims under counts II and
III against all parties including the Waste Management
defendants, so far as those claims attack the official
actions of MMWAC: the contract between MMWAC and the
Consolidated companies, the payments to the Consolidated
companies by MMWAC, and the tipping fees set by MMWAC for
Waste Management of Maine, whether for local or foreign
waste. It does not, however, resolve the attacks, scattered
throughout counts II, III, and III-A against the conduct of
Waste Management of Maine vis-a-vis its own customers. These
attacks charge Waste Management of Maine with predatory
pricing of its waste collection services, wrongful exclusive
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dealing by long-term contracts, and unreasonably restricting
the use of the containers it furnished.8
The Predation Claims. The district court held that the ____________________
Waste Management defendants were protected as to their
customer-related conduct under the state action doctrine.
The court reasoned that by its agreements with the
municipalities, MMWAC had committed itself to obey the law;
that Waste Management of Maine had contractual arrangements
with MMWAC; and that this contractual authority provided
sufficient municipal supervision to cast the garment of
Parker protection over Waste Management of Maine's own ______
conduct. 803 F. Supp. at 461. The district court noted,
however, that the contracts had not been made available to it
for inspection. Id. We are not persuaded that the rates and __
contract terms Waste Management set for its own customers
have been brought within Parker. ______
There is simply nothing to which we have been pointed to
show that MMWAC has claimed or exercised any control whatever
over the rates that Waste Management of Maine charges to its
customers or the other terms (such as length of contract) on
which it deals. While it is conceivable (but not proved)
____________________
8MMWAC is also charged in these counts but, apart from
bare references to conspiracy, there is nothing in the
complaint to connect MMWAC with Waste Management's actions
vis-a-vis its own customers except the favorable tipping
fees. Since the fee payments are state action, we do not
think that any claim has been stated against MMWAC based on
Waste Management's alleged predation.
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that MMWAC claims such authority with respect to customer
contracts in the MMWAC communities, it is certainly less
likely that it does so in the non-MMWAC communities which are
the locales for the predation alleged in counts III and III-
A. Absent a showing of control, questions of state
authorization and the adequacy of official supervision need
not even be reached.
It is a close question whether the judgment of dismissal
should nevertheless be affirmed on an alternative ground,
namely, that the allegations of the complaint fail to state a
predation claim even if the state action doctrine is ignored.
This alternative course is urged by Waste Management, and we
have given it serious consideration. The requisites for
proving predatory pricing are demanding, because the
conditions under which it is plausible are not common, and
because it can easily be confused with merely low prices
which benefit customers. See Barry Wright Corp. v. ITT ___ ___________________ ___
Grinnell Corp., 724 F.2d 227 (1st Cir. 1983). Exclusive ______________
dealing contracts may also benefit customers and are unlawful
only upon a particularized showing of unreasonableness.
Tampa Electric Co. v. Nashville Coal Co., 365 U.S. 320 __________________ ___________________
(1961).
Thus a complaint that did no more than allege predatory
pricing or exclusive dealing contracts with nothing more _______
specific might well be susceptible to dismissal for failure
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to state a claim. The present complaint is, in a sense, both
better and worse. It is somewhat more specific, asserting at
one point that the prices offered by Waste Management of
Maine were as much as 50 percent below market rates, at other
places that the rates were sometimes below variable cost, and
that the exclusive dealing contracts were for three years.
At the same time, the complaint goes some distance
toward undermining its own predatory pricing claim. Tri-
State implies that the low prices offered by Waste Management
of Maine were, in some instances at least, the result of the
favorable tipping fees that MMWAC made available to it. If
this is the whole of the charge, then there is no predatory
pricing claim at all. A company that rationally prices its
own product or service at or above its own costs does not
violate the Sherman Act merely because its costs, and thus
its prices, are lower than a rival's costs; and this is true
even though its lower costs may be due to the generosity, or
foolishness, of another supplier who has charged the company
too little for an input. See generally Brooke Group Ltd. v. _____________ ________________
Brown & Williamson Tobacco Corp., 61 U.S.L.W. 4699, 4702-03 ________________________________
(June 21, 1993).
Even apart from this possible explanation for lower
prices, Tri-State's predatory pricing claim is on the edge of
inadequacy. Although the complaint asserts that Waste
Management is pricing below variable cost--the normal test of
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predation, see Barry Wright--it is not clear what basis if ___ ____________
any Tri-State has for this assertion. The reference to
prices 50 percent below customary prices might invite some
suspicion, but in an industry like waste collection, in which
customers are scattered along routes, the variable cost of
serving additional customers to piece out a route may be
extremely low.
The claim that the duration of the exclusive contracts
is unlawful is, if anything, an even thinner case on the face
of the complaint. That some of the contracts are three
years, the only specific in the complaint, might invite
curiosity, but it does not even begin to establish
illegality. Under Tampa Electric Co., it is the totality of __________________
reasons for such a term, and its actual impact on
competition, that are decisive. Here, we know nothing about
the number of customers affected, the size of any
cancellation penalty, the practice in the industry, or
anything else that might help to paint a picture of the
competitive scene. Of course, a plaintiff is required only
to plead a claim, not to recite evidence, but the essence of
a claim like this one lies in the details.
A final concern is that predatory pricing is a section 2
claim and is condemned only where it is part of an attempt to
monopolize or is used to secure or retain an actual monopoly.
E.g., C.A.T. Industrial Disposal, Inc. v. Browning-Ferris ____ _________________________________ _______________
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Industries, 884 F.2d 209 (5th Cir. 1989).9 Tri-State __________
certainly does allege both the aim of monopoly and the
actuality, but its complaint supplies very little information
(e.g., market shares in a properly defined market) from which ____
one can frame a judgment whether this claim is plausible. The
complaint does say that Waste Management, Inc. and its
subsidiaries are the largest waste handling and disposal
business in Maine and in the nation; but the primary issue is
dominance or prospective dominance in a properly defined
economic market.
One's first instinct is that monopoly would be hard to
sustain in a business in which the basic equipment is a truck
and entry is apparently easy. See generally United States v. _____________ _____________
Waste Management, Inc., 743 F.2d 976 (2d Cir. 1984). But ______________________
waste collection might in theory be subject to local monopoly
in some circumstances. Thus, the efficiencies of collecting
from a number of closely located customer sites could make
new entry difficult, especially if the community were small
and many customers were tied to an existing dominant hauler
by long-term contracts; and environmental restrictions on new
landfills in some areas could give a decisive advantage to a
____________________
9Exclusive dealing, which can be attacked inter alia ___________
under section 1 of the Sherman Act, 15 U.S.C. 1, can be
condemned without a showing that monopoly power is present or
within reach. But the impact on competition is part of the
equation and, absent a potential monopoly or oligopoly, the
competitive impact may be hard to establish.
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hauler that controlled the only available facility. There
are some hints, but only hints, in the complaint that Waste
Management of Maine may enjoy an advantage of this latter
sort.
Taking everything together, we think it wiser not to
affirm the dismissal of the predation claims on the
alternative ground. Thin and doubtful though they may be, we
cannot say at this stage that these claims are hopelessly
inadequate if Parker's shield is removed. The district court ______
did not rest its decision on that ground, and it has been the
subject of only a small portion of the briefs on this appeal.
The old prejudice against summary disposition of antitrust
claims has diminished, First National Bank v. Cities Services ___________________ _______________
Co., 391 U.S. 253 (1968), but the grant of a Rule 12(b)(6) __
motion on the predation claims would, at least at this time,
be a shade too summary.
We underscore the limited nature of our remand. These
claims can be stated, if at all, only against the Waste
Management defendants. The district court is fully entitled
to demand more specific explanations from Tri-State as to the
gray areas in its predation claims, including the basis for
the charge of pricing below variable cost, the basis for the
market definitions urged, and the basis for any claim that
monopoly power exists or could plausibly be secured in a
properly defined economic market. Nothing in this opinion is
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intended to preclude summary disposition at a later stage,
and this need not mean much later if these claims prove to
have little substance.10
III. TRI-STATE'S REMAINING CLAIMS
Count IV of the complaint reasserts, under the Maine
antitrust statute, the federal antitrust claims made in the
earlier counts. The Maine antitrust statutes parallel the
Sherman Act, see Me. Rev. Stat. Ann. tit. 10, 1101 et ___ __
seq., and Tri-State offers no separate argument for liability ___
under state law. In point of fact, the Maine statute under
which MMWAC is organized also has an explicit exemption from
state antitrust laws for specified municipal contracts or
ordinances. Me. Rev. Stat. Ann. tit. 38, 1304-B(6).
Accordingly, the dismissal of the state antitrust claim is
sustained except as to the predation claims against the Waste
Management defendants.
In count V, Tri-State claims that the solicitation of
Tri-State customers by Waste Management of Maine was a
violation of Maine law against interference with advantageous
contractual relations. The gravamen is that this
solicitation was unlawful because achieved through
discriminatory tipping fees, predatory pricing, and other
____________________
10The Waste Management defendants are also free to
pursue their Parker defense as to the predation claims. Our ______
holding is that on this record there is an insufficient basis
for determining that Parker immunity exists as to the terms ______
on which Waste Management of Maine deals with its customers.
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wrongs. The district court dismissed the count on the ground
that the actions in question were within the ambit of the
state legislation and therefore could not be "wrongful
interference." 803 F. Supp. at 463-64. In this court, Tri-
State does not argue the claim at length, asserting instead
that its tortious interference claim is "contingent" upon our
finding that the alleged anticompetitive conduct enjoys no
immunity.
We think the fixing of tipping fees by the
municipalities and MMWAC is embraced by the Maine statute--
Tri-State makes no effort to show the contrary--but, as
earlier stated, we cannot find on this record that the terms
on which Waste Management of Maine dealt with its own
customers has been the subject of regulation. Accordingly,
count V, so far as it makes allegations against the private
defendants based on Waste Management of Maine's dealings with
its own customers, is remanded for consideration together
with the predation claims. Nothing in the complaint explains
why MMWAC is responsible for such contracts, however, and as
to it the dismissal of count V is sustained for failure to
state a claim.
Count VI of the complaint asserts a claim under 42
U.S.C. 1983 against Auburn. In part, this count says that
the City of Auburn injunction action against Tri-State ________________
represented discriminatory prosecution in violation of due
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process principles. Count VII makes the same complaint based
on equal protection principles. Count VIII, the final count
of the complaint, re-asserts the allegations of counts VI and
VII as violations of Maine's own civil rights statutes. Me.
Rev. Stat. Ann., tit. 5, 4682-83. On appeal, Tri-State
advises that it elects not to press the selective prosecution
issue in this court, reserving it for its state court appeal.
This leaves only Tri-State's final contention--the other
subject of its count VI claim--that the Auburn flow control
ordinance is "an unconstitutional taking of [Tri-State's]
property without compensation." Tri-State's theory seems to
be that the Auburn flow control ordinance has crippled Tri-
State's waste disposal business. This, says Tri-State, is a
business in which it has engaged for many years and its
interests in continuing without undue interference deserve
protection as "investment-backed expectations." Penn Central ____________
Transp. Co. v. New York City, 438 U.S. 104, 124 (1978). __________ _____________
While the Supreme Court did use the quoted phrase to
describe a pertinent consideration in takings cases, the Penn ____
Central opinion actually reaffirms that government for public _______
purposes can, without compensation, impose general
regulations that may severely limit the value of an ongoing
business. The Supreme Court has in fact twice upheld
municipal ordinances granting one waste collector the
exclusive right to collect and dispose of waste within the
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community, putting existing haulers out of business.11
Despite Tri-State's claims that these cases are outdated,
nothing in the Supreme Court's more recent decisions raises
serious doubts about their validity. The Sixth Circuit has
rejected an argument almost identical to Tri-State's. Hybud _____
Equipment Corp. v. City of Akron, 654 F.2d 1187 (1981), _______________ _______________
vacated on other grounds, 455 U.S. 931 (1982). ________________________
* * *
In this case, we have concluded that, with the possible
exception of its predation claims against the private
defendants, none of Tri-State's claims has any merit. This
does not mean that there is no basis for Tri-State's concerns
about the competitive impact of the MMWAC arrangements, or
for its assertion that the plan is unfair to it or bad for
recycling. But government action may be anticompetitive,
unfair or unwise without being illegal. Absent illegality,
the solution lies with the legislature and not in the courts.
The judgment of the district court is affirmed except ________
for the dismissal of the federal and state antitrust claims
in counts II-V and the tort claim in count VI insofar as
those counts charge the Waste Management defendants with
predation or related anticompetitive conduct toward
____________________
11See California Reduction Co. v. Sanitary Reduction ___ ________________________ __________________
Works, 199 U.S. 306 (1905); Gardner v. Michigan, 199 U.S. 325 _____ _______ ________
(1905).
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customers. Those claims are remanded for further proceedings ________
in accordance with this opinion. No costs.
It is so ordered. ________________
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Document Info
Docket Number： 92-2218
Filed Date： 7/14/1993
Precedential Status： Precedential
Modified Date： 9/21/2015