Rural Electric Co. v. Cheyenne Light, Fuel & Power Co.

762 F.2d 847
CourtCourt of Appeals for the Tenth Circuit
DecidedMay 20, 1985
DocketNo. 83-1415
StatusPublished
Cited by2 cases

This text of 762 F.2d 847 (Rural Electric Co. v. Cheyenne Light, Fuel & Power Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rural Electric Co. v. Cheyenne Light, Fuel & Power Co., 762 F.2d 847 (10th Cir. 1985).

Opinion

SETH, Circuit Judge.

This is an action brought by the appellant Rural Electric Company against the Cheyenne Light, Fuel & Power Company, the City of Cheyenne, the Cheyenne City Council and seven individuals. The complaint alleged several causes of action. The first three described state law claims— breach of contract, and violation of the Wyoming Constitution and statutes. The other causes allege Sherman Act violations. The defendants filed motions directed to the federal claims moving for dismissal for a failure to state a cause of action under Rule 12(b)(6) of the Federal Rules of Civil Procedure, and for lack of jurisdiction. The motions were granted and the pendent state claims were dismissed. 602 F.Supp. 105 (D.C.Wyo.1983).

Both utilities wanted to provide electricity to a particular location where an industrial plant was to be built, and both sought authority to do so. The location was in the City of Cheyenne. The defendant Cheyenne Light, Fuel & Power Company served all consumers of electricity in Cheyenne and some areas beyond the City limits. Plaintiff Rural Electric served consumers in the adjoining states and areas adjacent to or near Cheyenne.

The particular location in issue, referred to as Lot 24, was the subject of a contract between the two utilities in 1952 when the service areas were allocated to each by agreement. In the agreement Lot 24 was to be served by Rural Electric. However, the area was later annexed to the City. This agreement is the subject of the breach of contract cause.

Rural Electric made a strong effort to obtain the right to serve Lot 24. This included several applications to the City for a franchise and efforts to persuade the Wyoming Public Service Commission to issue to it a certificate of public convenience and necessity. It was not successful in its efforts. Instead the City issued the Cheyenne Light, Fuel & Power Company a nonexclusive franchise and the Public Service Commission issued to Cheyenne Light a [849]*849certificate of public convenience and necessity.

It is apparent that during the course of the negotiations and applications the City was favorable to Cheyenne Light. The City intervened before the Public Service Commission on behalf of Cheyenne Light. The City franchise was granted to Cheyenne Light, as expressed by the City, to keep the City “under one power company.”

The complaint asserts that the defendants all sought individually and in concert to ke,ep Rural Power out of Cheyenne and to have it served only by Cheyenne Light, thus the anti-competitive conspiracy causes of action.

The dismissal by the trial court and this appeal center on the “state action” immunity doctrine described in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315. There the Court held that a state program ■ fixing prices did not violate the Sherman Act because the Act “must be taken to be a prohibition of individual and not state action,” and that the Act “gives no hint that it was intended to restrain state action or official action directed by a state.”

The “state action” exception was further refined in Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572, Cantor v. Detroit Edison Co., 428 U.S. 579, 96 S.Ct. 3110, 49 L.Ed.2d 1141, Bates v. State Bar of Arizona, 433 U.S. 350, 97 S.Ct. 2691, 53 L.Ed.2d 810, Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364, and Community Communications Co. v. Boulder, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810. In Lafayette the Court in part said (quoting in part from 532 F.2d 431, 434 (5th Cir.)):

“This does not mean, however, that a political subdivision necessarily must be able to point to a specific, detailed legislative authorization before it properly may assert a Parker defense to an antitrust suit____ [A]n adequate state mandate for anti-competitive activities of cities and other subordinate governmental units exists when it is found ‘from the authority given a governmental entity to operate in a particular area, that the legislature contemplated the kind of action complained of.’ ”

435 U.S. at 415, 98 S.Ct. at 1138.

In the case before us there are specific directives and statements of policy by the State of Wyoming as compared to the Home Rule authority in Community Communications. See also Pueblo Aircraft Service v. Pueblo, Colorado, 679 F.2d 805 (10th Cir.).

The Wyoming Constitution in Article 13, § 4, provides:

“No street passenger railway, telegraph, telephone or electric light line shall be constructed within the limits of any municipal organization without the consent of its local authorities.”

The Wyoming statutes at § 37-2-205(b), provide:

“No public utility shall henceforth exercise any right or privilege or obtain a franchise or permit to exercise such right or privilege from a municipality or county, without having first obtained from the [public service] commission a certificate that public convenience and necessity require the exercise of such right and privilege____”

The constitutional and statutory provisions thus interlock and action by both entities is required. The state constitution prohibits monopolies in general but the particular provision must prevail.

This is a somewhat unusual combination of policy statements or directives which lead to the conclusion that the operating rights of Cheyenne Light was a consequence of “state action” under Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364. The state directives are to the separate and independent governmental entities with authority over the subject and which acted pursuant to such directives.

The Supreme Court has recently, and since this ease was submitted on appeal, handed down an opinion which treats several of the issues in this case. The Court in Town of Hallie v. City of Eau Claire, [850]*850U.S. -, 105 S.Ct. 1713, 85 L.Ed.2d 24, considers whether the statute must compel the municipality to take the action in issue. The Court distinguishes the cases where private entities are claiming the state action exemption and where a municipality makes such a claim. It concludes that no compulsion is required as to municipalities. We have before us both a private corporation, a municipality, and individuals.

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Bluebook (online)
762 F.2d 847, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rural-electric-co-v-cheyenne-light-fuel-power-co-ca10-1985.