City of Kirkwood, a Municipal Corporation v. Union Electric Company, a Corporation

671 F.2d 1173, 46 P.U.R.4th 182, 1982 U.S. App. LEXIS 21283
CourtCourt of Appeals for the Eighth Circuit
DecidedMarch 4, 1982
Docket81-1521
StatusPublished
Cited by72 cases

This text of 671 F.2d 1173 (City of Kirkwood, a Municipal Corporation v. Union Electric Company, a Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
City of Kirkwood, a Municipal Corporation v. Union Electric Company, a Corporation, 671 F.2d 1173, 46 P.U.R.4th 182, 1982 U.S. App. LEXIS 21283 (8th Cir. 1982).

Opinion

ARNOLD, Circuit Judge.

The plaintiff, City of Kirkwood, Missouri (Kirkwood), appeals from the District Court’s order granting summary judgment in this antitrust action to the defendant, Union Electric Company (UE). Kirkwood, which buys electricity from UE, alleges that UE violated the antitrust laws 1 primarily through creating and maintaining an anti-competitive “price squeeze.” The principal issue on appeal is whether the District Court was correct in concluding that the alleged price squeeze is protected from antitrust attack by the exclusive jurisdiction of certain state and federal regulatory agencies, the filed-rate doctrine, the state-action doctrine, and the Noerr-Pennington doctrine. We do not agree that UE is immunized from antitrust liability by any of these doctrines, and therefore we reverse.

I.

Kirkwood is a municipal corporation which sells electric power at retail to customers in approximately two-thirds of its geographical area. Kirkwood does not itself produce electricity, but instead buys it at wholesale from UE. UE is an electric utility which produces, transmits, and delivers electric power to both wholesale and retail customers in Missouri, Iowa, and Illinois. UE supplies all of Kirkwood’s wholesale electric-power requirements and provides retail electric service to one-third of Kirkwood’s area. 2

*1176 UE’s wholesale and retail rates are each subject to governmental regulation. Under the Federal Power Act, 16 U.S.C. §§ 824 et seq. (1974), the Federal Energy Regulatory Commission (FERC) 3 regulates wholesale sales of electric power in interstate commerce, such as the sales from UE to Kirk-wood. The FERC is required to ensure that all rates and charges within its jurisdiction are just and reasonable. 16 U.S.C. § 824d(a). Whenever it finds a rate to be discriminatory or preferential, it must determine and impose a reasonable rate. 16 U.S.C. § 824e(a). When a utility desires to increase (or decrease) its wholesale rates, it must file a proposed rate schedule with the FERC. Implementation of the increase may be suspended for up to seven months, 16 U.S.C. § 824d(d), (e), but if the FERC delays action on a proposal for more than seven months, it automatically goes into effect, subject to refund if the FERC later determines the increase to be unlawful.

UE’s retail rates are regulated by the Missouri Public Service Commission (PSC) pursuant to Mo.Ann.Stat. ch. 393 (Vernon 1975). Like the Federal Power Act, the Missouri statute prohibits rates which are unjust, unreasonable, unjustly discriminatory, or unduly preferential. Mo.Ann.Stat. § 393.140(5). In Missouri, an increase in retail rates cannot go into effect until after the PSC approves it, but the PSC must act on rate applications no later than eleven months after filing. Mo.Ann.Stat. § 393.-150.

Kirkwood filed its complaint on September 1, 1977, alleging that UE violated the Sherman and Robinson-Patman Acts. Kirkwood charges that UE’s wholesale rate increases in past years (particularly its 33.72% increase in 1975) in conjunction with its smaller and deferred increases in retail rates have created a “price squeeze” placing Kirkwood at a competitive disadvantage. 4 Because the wholesale rate Kirkwood paid to UE following these rate increases exceeded the retail rate paid by UE’s large industrial primary service customers, Kirk-wood asserts that it suffered competitive injury. Specifically, Kirkwood claims that it has been unable to attract large industrial customers to settle in its retail distributional area. In addition, Kirkwood complains that it has encountered increasing pressure to close down its electric power distribution operation and to sell or lease it to UE.

Aside from the price squeeze, Kirkwood contends UE committed several other antitrust violations, including price discrimination, maintenance of a territorial restriction, refusal to “wheel” power, 5 and refusal to set a transmission rate for Kirkwood. 6 In essence, Kirkwood’s complaint charges that UE has a regional monopoly over the wholesale supply of electric power, and that UE has conspired with its affiliates primarily through the price-squeeze mechanism to eliminate the retail competition posed by small municipal utilities such as Kirkwood.

On January 23, 1978, the District Court granted UE’s motion to dismiss Kirkwood’s Robinson-Patman Act claim on the ground that electricity is not a commodity and that the complaint did not sufficiently allege sales occurring in interstate commerce. On July 24, 1980, Kirkwood asked the court to reconsider the dismissal, or in the alternative to allow Kirkwood to amend its complaint to correct its supposed defects. The court never ruled on Kirkwood’s motion, *1177 but instead disposed of the entire matter on December 31, 1980, by granting UE’s motion for summary judgment as to the entire complaint. This appeal followed.

H.

The District Court’s order granting UE summary judgment treats Kirkwood’s case as resting solely on its price-squeeze allegation, 7 and indeed that is the principal basis of the complaint. The District Court decided that the price squeeze could not be the basis of antitrust liability for three reasons: (1) UE’s wholesale and retail rates fall under the exclusive regulatory authority of federal and state agencies, and a court’s award of antitrust damages for a price squeeze would conflict with the principle that no utility may deviate from its filed rates; (2) because UE’s rates are subject to pervasive regulation, they fall within the state-action antitrust exemption; and (3) the First Amendment immunizes UE’s actions in petitioning for rate increases. We respectfully disagree on each of these points. 8

A. Exclusive jurisdiction and the filed-rate doctrine

The exclusive-jurisdiction argument rests on the idea that because regulatory commissions were created to monitor the reasonablcncss of utility rates, they alone should be responsible for remedying unjust and discriminatory rates. Under this analysis, Kirkwood’s sole avenue for challenging the price squeeze would be through participating in regulatory hearings on proposed rates, an avenue which has thus far yielded Kirkwood little relief. 9

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Bluebook (online)
671 F.2d 1173, 46 P.U.R.4th 182, 1982 U.S. App. LEXIS 21283, Counsel Stack Legal Research, https://law.counselstack.com/opinion/city-of-kirkwood-a-municipal-corporation-v-union-electric-company-a-ca8-1982.