Summit Water Distribution Co. v. Summit County

2005 UT 73, 123 P.3d 437, 538 Utah Adv. Rep. 38, 2005 Utah LEXIS 121, 2005 WL 2900037
CourtUtah Supreme Court
DecidedNovember 4, 2005
Docket20040033
StatusPublished
Cited by19 cases

This text of 2005 UT 73 (Summit Water Distribution Co. v. Summit County) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Summit Water Distribution Co. v. Summit County, 2005 UT 73, 123 P.3d 437, 538 Utah Adv. Rep. 38, 2005 Utah LEXIS 121, 2005 WL 2900037 (Utah 2005).

Opinion

DURHAM, Chief Justice:

¶ 1 The appellants brought suit against Summit County, a county-created water service district, and related parties, alleging antitrust violations under section 76-10-914 of the Utah Antitrust Act and Article XII, Section 20 of the Utah Constitution. The district court dismissed these claims on the basis that the appellees were exempt from the Antitrust Act under Utah Code section 76-10-915(1)© and that the constitutional antitrust provision is not self-executing. The appellants challenge the district court’s analysis of both issues on appeal. Because we hold that the appellees’ alleged anticompeti-tive activities do not qualify as acts of a “municipality” that are “authorized or directed by state law” under section 76-10-915(1)©, and that the appellees are therefore not entitled to the statutory exemption, we do not reach the issue concerning the interpretation of Article XII, Section 20.

BACKGROUND

¶ 2 When reviewing a district court’s grant of a motion to dismiss, “we accept the factual allegations in the complaint as true and interpret those facts and all reasonable inferences drawn therefrom” in the light most favorable to the plaintiff as the nonmov-ing party. Russell Packard Dev., Inc. v. Carson, 2005 UT 14, ¶ 3, 108 P.3d 741. We recite the facts of this case accordingly.

¶ 3 Appellant Summit Water Distribution Company (Summit Water) is a private nonprofit corporation that distributes culinary water for commercial and residential use to its shareholders within the unincorporated portion of the Snyderville Basin in Summit County. In January 2000, Summit Water was the leading competitor among eleven water companies that operated in the Sny- *439 derville Basin. In February 2000, Summit County (the County) adopted an ordinance renaming an existing special service district as the Mountain Regional Water Special Service District (Mountain Regional), and naming the County’s Board of County Commissioners as Mountain Regional’s governing board. The goal of the resolution was to establish Mountain Regional as a Snyderville Basin-wide water service district. At that time, Mountain Regional had 5.7% of the market in Snyderville Basin while Summit Water had 34%. Shortly afterwards, Mountain Regional hired William Todd Jarvis — an employee of Montgomery Watson Harza, a California corporation — to provide water engineering services on an independent contractor basis. At around the same time, the County also hired Jarvis to perform water concurrency ratings of culinary water companies. These ratings purported to measure a water company’s capacity to supply water to county residents. The County also passed new concurrency ordinances that required developers seeking building permits or planning and zoning approvals to prove they had obtained a commitment from a water company with a sufficient concurrency rating to provide water to their developments. 1 According to Summit Water, the County used the arrangement with Jarvis, in conjunction with the new concurrency ordinances, to ensure that Mountain Regional would have a competitive advantage in seeking new water connections.

¶ 4 Summit Water' also faced a tax assessment increase, from $5000 to nearly $60,000, and the County Commission denied its appeal from that assessment. Summit Water was also forced to engage in an extended dispute with Jarvis over its concurrency rating while Mountain Regional faced no such difficulties. Meanwhile, Mountain Regional also sought, ultimately unsuccessfully, to acquire Summit Water’s water infrastructure through eminent domain proceedings. As of September 2001, Mountain Regional had acquired all but three of the water companies operating in the Snyderville Basin.

¶ 5 In September 2001, Summit Water and a number of its shareholders (collectively, Summit Water appellants) brought suit against the County, the County Commission, Mountain Regional, Montgomery Watson Harza, and a number of their officers and employees (collectively, County appellees), alleging that these entities and individuals had conspired in restraint of trade and in an attempt “to monopolize the culinary water product market in the Snyderville Basin geographic market.” As subsequently amended in March 2002, the complaint specifically alleged that the County appellees had “conspired, agreed, and combined to unlawfully tie the sale, distribution and delivery of [Mountain Regional] water to [the grant of] building permits and planning approvals, fix prices, [engage in] other restraints of trade and impair competition,” and had engaged in “illegal conspiracies, combinations and arrangements by anti-competitive conduct” in order to gain a monopoly over culinary water distribution in the Snyderville Basin, all in violation of both the Utah Antitrust Act, Utah Code Ann. §§ 76-10-911 to -926 (2003), and Article XII, Section 20 of the Utah Constitution. 2 For these alleged antitrust viola *440 tions, the Summit Water appellants sought injunctive relief against all County appellees and compensatory and treble damages against Montgomery Watson and Jarvis.

¶ 6 The County appellees filed a rule 12 motion to dismiss. The district court denied this motion in relevant part in an order issued March 4, 2002, and this court denied the appellees’ petition for interlocutory appeal. The district court based its denial on its conclusions that Article I, Section 26 of the Utah Constitution was a self-executing provision, that the state action immunity doctrine enunciated in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), did not apply to actions under state antitrust laws, and that Utah Code section 76-10-915(1)(f), which exempts “municipalities” from the state antitrust act, did not apply here because “[n]either a county nor its special service districts are municipalities.”

¶ 7 After discovery was underway, the County appellees, in January 2003, filed a motion to reconsider and to dismiss, which the district court construed as a motion to dismiss under rule 12(b)(6) of the Utah Rules of Civil Procedure. The district court issued an order on May 27, 2002, in which it reevaluated its prior legal conclusions in light of the constitutional and legislative historical evidence newly submitted by the County ap-pellees. Based on its review of those materials, the district court concluded that Article XII, Section 20 was not, in fact, self-executing but was meant rather as a “strong policy statement to guide future legislative action” so as to “guard against ... dilution] or eliminat[ion] [of] the Antitrust Act in a changed political climate.” The court therefore dismissed the Summit Water appellants’ claims based on Article XII, Section 20.

¶ 8 The court then reconsidered its conclusion that counties and special service districts were not included within the “municipality” exemption contained in Utah Code section 76-10-915. While confirming that by its plain meaning the term “municipality” referred only to a city, the court determined that the legislative intent behind the municipality exemption could not be discerned based on plain meaning alone when the legislative history submitted by the County appel-lees cast “ ‘doubt or uncertainty’ ...

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Bluebook (online)
2005 UT 73, 123 P.3d 437, 538 Utah Adv. Rep. 38, 2005 Utah LEXIS 121, 2005 WL 2900037, Counsel Stack Legal Research, https://law.counselstack.com/opinion/summit-water-distribution-co-v-summit-county-utah-2005.