TEC Cogeneration Inc. v. Florida Power & Light Co. ( 1996 )

United States Court of Appeals,
Eleventh Circuit.
Nos. 94-4323, 94-4496.
TEC COGENERATION INC., RRD Corporation, as they are partners in
South Florida Cogeneration Associates, Thermo Electron Corporation,
Rolls-Royce, Inc., Plaintiffs-Appellees,
v.
FLORIDA POWER & LIGHT COMPANY, FPL Group, Inc., FPL Energy
Services, Inc., Defendants-Appellants,
Wayne H. Brunetti, Larry T. Atkinson, Joe C. Collier, Jr., Clark
Cook, et al., Defendants.
March 8, 1996.
Appeals from the United States District Court for the Southern
District of Florida. (No. 88-2145-CIV-Atkins), C. Clyde Atkins,
Judge.
Before EDMONDSON, Circuit Judge, HILL, Senior Circuit Judge, and
MILLS*, District Judge.
HILL, Senior Circuit Judge:
This is an appeal from the denial of a motion for summary
1
judgment by the district court. Two questions are presented:
first, whether a public utility is immune from antitrust liability
under the state-action doctrine of Parker v. Brown, 317 U.S. 341,
*
Honorable Richard Mills, U.S. District Judge for the
Central District of Illinois, sitting by designation.
1
We exercise dual jurisdiction in this case. 28 U.S.C. §§
1291, 1292(b). The denial of a motion for summary judgment under
the state-action immunity doctrine is immediately appealable
under the collateral order exception to the final judgment rule.
See Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct.
1221, 93 L.Ed. 1528 (1949); Praxair, Inc. v. Florida Power &
Light Co., 64 F.3d 609, 611 (11th Cir.1995). In addition, the
district court certified its summary judgment order for immediate
appeal and this court granted Appellants' protective petition for
permission to appeal pursuant to 28 U.S.C. § 1292(b). The
appeals were then consolidated by order of this court as they
both involve the same parties and the same issues, and are taken
from the same summary judgment order.
63 S.Ct. 307, 87 L.Ed. 315 (1943), for its allegedly
anti-competitive conduct concerning a cogenerator2 in the areas of
wheeling,3 rates, and interconnection; and second, whether
lobbying of a county legislative body by the utility is protected
from antitrust liability under the Noerr/Pennington doctrine.
Eastern R.R. Presidents Conference v. Noerr Motor Freight, Inc.,
365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961); United Mine
Workers of America v. Pennington, 381 U.S. 657, 85 S.Ct. 1585, 14
L.Ed.2d 626 (1965). The district court found that the utility was
not entitled to immunity from antitrust sanctions for its actions.
We disagree. The denial by the district court of the utility's
2
Cogeneration is the production of electricity and useful
thermal energy at a single facility. The Public Utility
Regulatory Policies Act of 1978 (PURPA), Pub.L. No. 95-617, 92
Stat. 3117 (1978), defines a cogeneration facility as a facility
that produces electric energy and steam, or other forms of useful
energy, such as heat, for industrial, commercial, heating, or
cooling purposes. 16 U.S.C. § 796(18)(A). Cogeneration can be
an efficient use of fuel because a cogeneration facility (unlike
some more traditional power plants) can utilize thermal energy
that might otherwise be a wasted by-product in the production of
electricity. For example, the Miami downtown cogeneration
facility that is the subject of this case has the capability to
produce both electricity for the Downtown Government Center and
chilled water for air conditioning. PURPA directs the Federal
Energy Regulatory Commission (FERC) to promulgate rules to
facilitate cogeneration and to purchase electricity from
cogeneration and small power production facilities at a rate that
does not exceed the incremental cost to the electric utility of
alternative electric energy; state utility commissions are then
directed to implement and expand FERC rules at the state level.
16 U.S.C. § 824a-3.
3
Wheeling electric power means to transfer, by direct
transmission or displacement, electric power from one utility to
another over the facilities of an intermediate utility. See
Otter Tail Power Co. v. U.S., 410 U.S. 366, 368, 93 S.Ct. 1022,
1025, 35 L.Ed.2d 359 (1973).
motion for summary judgment is reversed.4
I. FACTUAL BACKGROUND
Shortly after Congress enacted the Public Utility Regulatory
Policies Act of 1978 (PURPA),5 Metropolitan Dade County, Florida
(Dade) began to consider a cogeneration facility as part of its
Miami Downtown Government Center (Center), then in the planning
6
stages. At the time, Appellees (Cogenerators) were engaged in the
business of developing cogeneration projects nationwide. They also
4
Although not styled as such, we note that the motion for
summary judgment ruled upon by the district court was really a
motion for partial summary judgment. Our determination here does
not entirely resolve the dispute between these parties as other
claims remain to be resolved on remand.
5
Prior to PURPA, and for most of the twentieth century,
electric utilities were given monopoly franchises to take
advantage of the cost benefits of centralized production.
Douglas Gegax & Kenneth Nowotny, Competition and the Electric
Utility Industry: An Evaluation, 10 Yale J. on Reg. 63 (1993).
In return, the utility gave the state the right to regulate price
and service quality, restrict profit rates, and veto investment
decisions. It vested the state with the authority to balance
consumer and stockholder interests. Id. Following the 1973 Arab
oil embargo, the public began to perceive a worldwide energy
crisis and, in the late 1970's, the practice of monopolist
utilities was disrupted as Congress and the executive branch took
a number of steps to respond to this problem. Id. at 64. PURPA
was one such Congressional response. Its passage marked the
beginning of a radical change in the status quo for utilities.
PURPA encouraged fuel conservation and efficient pricing by
relaxing restrictions on entry into the (former monopolist's)
service area. It also encouraged the development of
cogeneration. Id.; see American Paper Institute, Inc. v.
American Elec. Power Service Corp., 461 U.S. 402, 404-05, 103
S.Ct. 1921, 1923-24, 76 L.Ed.2d 22 (1983). Historically,
utilities were reluctant to purchase power from and to sell power
to the nontraditional cogeneration facility. F.E.R.C. v.
Mississippi, 456 U.S. 742, 750-51, 102 S.Ct. 2126, 2132-33, 72
L.Ed.2d 532 (1982); supra n. 2.
6
TEC Cogeneration, Inc. (TEC) is a subsidiary of Appellee
Thermo Electron Corporation (Thermo). RRD Corp. (RRD) is a
subsidiary of Appellee Rolls-Royce, Inc. (Rolls-Royce). TEC and
RRD are joint venture partners in the partnership South Florida
Cogeneration Associates, also an Appellee.
supplied turbines and related services for use in cogeneration
projects. The Cogenerators encouraged Dade to construct such a
facility using their equipment and services.
Appellant Florida Power & Light Company (FPL)7 is an
investor-owned public electric utility engaged in three functions:
generation, transmission, and distribution and sale of electric
energy.8 It services southern and eastern Florida, including most
of Dade. FPL is regulated by the Florida Public Service Commission
(PSC).9 It owns and controls ninety percent of the total
7
Appellant FPL Group, Inc., is a public utility holding
company, subject to the provisions of the Public Utility Holding
Company Act of 1935 (PUHCA). As FPL's parent corporation, it
owns all its capital stock. Appellant FPL Energy Services, Inc.,
itself a cogeneration project developer, is a one hundred
percent-owned subsidiary of FPL Group Capital, Inc., which in
turn is a one hundred percent-owned subsidiary of FPL Group, Inc.
8
FPL is the fifth largest electric utility in the United
States. It is an integrated electric utility that performs three
functions (generation, transmission, distribution and sale) via a
transmission system integrated within an interstate power grid.
FPL generates electricity by transforming heat, moving water, or
other forms of energy into electric power. In so doing, it uses
large quantities of oil, natural gas, and bituminous coal. These
substances are transported into Florida through interstate
commerce. Within Florida, FPL generates electricity at licensed
nuclear power plants. FPL transports electric power from
generating plants through electric transmission facilities to
distribution points. From there, delivery and sales are made to
ultimate consumers.
9
In 1981, the Florida Legislature authorized and directed
the Florida Public Service Commission (PSC) to develop state
regulations on the relationship between cogenerators and
Florida's electric utility companies. 1981 Fla.Laws. ch. 81-131,
§ 1 (codified as amended at Fla.Stat. § 366.05 (1994)). The PSC
is charged with exclusive legislative authority under Chapter
366, Florida Statutes, to regulate electric utilities, including
investor-owned electric utilities, municipal electric utilities,
and rural electric cooperatives in the state. The PSC exercises
the state's police power by ensuring safe, adequate, and reliable
electric service at fair, just, and reasonable rates. Pursuant
to Chapter 366 and PURPA, the PSC also exercises extensive
electrical generating capacity in its service area and the
electrical grid with which Center can interconnect. FPL has
monopoly power within its service area both as to the purchase of
wholesale power and the sale of retail power.
In 1981, Dade issued requests to bid on the Center
cogeneration facility. Cogenerators' proposal was selected and in
late 1983, Dade and the Cogenerators entered into contracts
providing for the construction and operation of a twenty-seven
megawatt cogeneration facility at Center and for the supply of
cogeneration equipment for the project. The Cogenerators agreed to
operate Center for Dade for sixteen years. The Cogenerators also
contracted to supply electrical and thermal power to Dade.10 Dade
and the Cogenerators were to share in the profits, if any, from
11
operating the Center; the Cogenerators were to absorb the losses.
The final contract allowed for excess power, if any, from Center,
to be dispensed to Dade facilities outside Center, such as to the
12
Jackson Memorial Hospital/Civic Center complex (Hospital).
authority over the relationship between electric utilities and
cogenerators. It seeks to balance competing interests: the
encouragement of cost-effective cogeneration on one hand and the
avoidance of its subsidization by utility ratepayers on the
other.
10
The generation facilities themselves are owned by an
investment group, Florida Energy Partners, that has no ownership
affiliation with the Cogenerators.
11
For the initial sixteen-year period of operation, Center
was projected to generate cumulative profits of approximately
seventy-five million dollars.
12
Although FPL was not a party to the final contract, it
participated in its negotiation. An early draft contained a best
efforts clause that provided that, if electrical demand at Center
proved inadequate to absorb output, Dade would use Center power
at other Dade facilities, municipal buildings, and state
Practically speaking, excess power could be dispensed only one of
two ways, either via a wheeling arrangement with FPL or by
constructing a separate transmission line. A separate line would
require the approval of the local legislative body, i.e., the Dade
County Board of Commissioners (Commission). With these parameters
in place, construction of the cogeneration facility commenced in
mid-1984 and the facility became fully operational at the end of
1986.13
Center, armed with the capability to produce twenty-seven
megawatts of electrical power, actually needed only ten megawatts
with which to operate. With seventeen surplus megawatts of
generating capacity, Center quickly proved to be unprofitable. By
14
then, however, the die was cast; the project was in place.
Fingers began to point as the Cogenerators and Dade each blamed the
other for a projection miscalculation of this magnitude.15
buildings. FPL objected to the provisions concerning municipal
and state buildings, claiming they were in violation of Florida
law prohibiting retail sales of electricity to unrelated third
parties. E.g., PW Ventures, Inc. v. Nichols, 533 So.2d 281(Fla.1988) (a cogenerator may consume the electricity it
generates itself or sell it wholesale to utilities; it may not
make retail sales to third parties). Dade and the Cogenerators
agreed to make the contract changes.
13
About this time, with the help of a consulting firm, FPL
began conducting an eighteen-month study about the effects
(including the potential threat) of cogeneration on it and its
ratepayers, entitled "Strategic Energy Business Study" (SEBS).
14
During the initial sixteen-year period of operation,
Cogenerators sustained estimated losses of several thousand
dollars per month. When the record was closed in 1989,
Cogenerators calculated cumulative losses of over sixty million
dollars.
15
Cogenerators filed separate suit in Florida state court
charging Dade with fraudulently overstating Center's projected
electrical demands. This litigation was settled in 1994.
To reduce their losses, the Cogenerators sought a logical use
for the excess power. Under rules promulgated by the PSC, two
options were immediately available: (1) the Cogenerators could
either sell the surplus electricity to FPL at a rate equal to FPL's
avoided cost;16 or (2) the Cogenerators could force FPL to transmit
or wheel the excess power to another Florida utility, who in turn
would purchase it at its own avoided cost rate.
At avoided cost rates, it appeared that the Cogenerators
could not break even with either option. FPL alleges that the
Cogenerators deliberately ignored their two legitimate options and
pursued a third, allegedly illegitimate, alternative in order to
obtain higher prices for their power: the Cogenerators approached
FPL to wheel their surplus power to other Dade facilities outside
Center, most notably, to Hospital, two miles northwest. Believing
that the Cogenerators' request violated the PSC's self-service
wheeling rules,17 FPL declined to wheel.
Rebuffed by FPL, the Cogenerators then turned to the best
efforts clause in its contract with Dade. They directed Dade, in
effect, to petition the PSC for an order compelling FPL to wheel
16
Under PURPA and implementing federal and state
regulations, utilities are required, upon request, to purchase
the power output of cogeneration facilities at a price equal to
what it would have cost the utility to generate that power, or
its avoided cost rate.
17
Under PSC regulations, the Cogenerators can ask FPL to
wheel electricity from Center to Hospital only if they qualify
under the self-service wheeling rules: (1) there must be an
exact identity of ownership between the generator and the
consumer of the electricity; and (2) wheeling will not increase
rates to utility, i.e., FPL ratepayers. Fla.Admin.Code R. 25-
17.0882. Under Florida law, a cogenerator may not sell
electricity at retail. PW Ventures, 533 So.2d at 281.
power from Center to other Dade facilities, including Hospital.
After an eleven-month administrative proceeding, the PSC
denied Dade's petition. The PSC found that Dade could not comply
with the PSC's self-service wheeling rules because Dade did not
actually own the generating equipment that produced the power to be
wheeled; did not generate the power to be wheeled; and was
contractually bound to purchase the electricity from the
Cogenerators.18 Hence, the PSC found, by definition, that Dade
could not "serve oneself." Petition of Metropolitan Dade County
for Expedited Consideration of Request for Provision of Self-
Service Transmission, Order No. 17510, Docket No. 860786-EI, 87
FPSC 5:32, 35-37 (May 5, 1987).19
After the PSC wheeling disallowance, the Cogenerators played
their fourth and final card: what can't be sent indirectly, send
directly. They approached Dade with a proposal to construct a
separate transmission line from Center to Hospital. A separate
line would reduce surplus electricity without being dependent upon
wheeling by FPL at avoided cost rates. A joint submission was made
by the Cogenerators and Dade to Commission for its approval. The
Cogenerators lobbied Commission for approval; FPL lobbied against.
The Commission voted five-to-one against the construction of the
separate transmission line.
18
The fact that Dade had legal title to the building in
which the electrical generating equipment was housed was not
controlling. The PSC also saw no merit to Dade's argument that
its option to purchase the cogeneration equipment was the
equivalent of equitable title.
19
The PSC did not address the impact, if any, of the
wheeling request upon other FPL customers.
Within weeks, the Cogenerators filed this suit.
II. PROCEDURAL BACKGROUND
The Cogenerators contend they suffered losses at Center due to
FPL's anti-competitive conduct in three areas: (1) by FPL's
refusal to wheel, when FPL allegedly prevented Cogenerators from
providing service to Hospital; (2) by FPL's manipulation of its
rate structure (when FPL allegedly offered lower rates to customers
considering cogeneration; paid cogenerators too little for their
excess power; and proposed higher rates for backup power sold to
cogenerators); and (3) by FPL's interference with interconnection
(when FPL allegedly imposed unreasonable terms in the
interconnection agreement governing the manner in which Center is
physically connected to FPL's system).20
After discovery, FPL filed a motion for summary judgment. The
district court heard oral argument in 1989 and 1993. In 1994, the
district court denied summary judgment.
This appeal follows.
III. STANDARD OF REVIEW
Application of the state-action and Noerr/Pennington immunity
20
The Cogenerators' complaint, asserting antitrust and
tortious-interference claims, was filed in November 1988. An
amended complaint was filed in March 1989. Count One of the
amended complaint claims that FPL's actions constituted an
unlawful monopoly and unlawful attempts to monopolize trade in
violation of Section 2 of the Sherman Act, 15 U.S.C. § 2; Count
Two claims that the conduct constituted an unlawful conspiracy in
restraint of trade in violation of Section 1 of the Sherman Act,
15 U.S.C. § 1; Count Three claims that FPL's actions constituted
unlawful discrimination in price or services or facilities
furnished to customers, in violation of Section 2 of the Clayton
Act, as amended by the Robinson Patman Act, 15 U.S.C. § 13;
Count Four claims that FPL tortiously interfered with the
Cogenerators' contractual relations in violation of common law.
doctrines is a question of law. See F.T.C. v. Hospital Bd. of
Directors of Lee County, 38 F.3d 1184, 1187 (11th Cir.1994). As
the question of immunity is strictly one of law, this court makes
a de novo determination of whether the district court erred in
denying summary judgment. Bolt v. Halifax Hosp. Medical Center,
980 F.2d 1381, 1384 (11th Cir.1993).
IV. DISCUSSION
A. Introduction
FPL's motion for summary judgment relies principally on two
immunity doctrines: the state action immunity doctrine and the
Noerr/Pennington immunity doctrine. The district court denied
summary judgment under both.
We review each of these findings de novo.
B. The State Action Immunity Doctrine
The Supreme Court first articulated the state-action immunity
doctrine in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed.
315 (1943). In Parker, the Court grappled with the applicability
of the Sherman Act to a California agricultural statutory program
intended to restrict competition among private producers of raisins
in order to stabilize prices and prevent economic waste. Relying
on principles of federalism and state sovereignty, the Court
refused to find that the Sherman Act was "intended to restrain
state action or official action directed by a state" and determined
that "[t]here is no suggestion of a purpose to restrain state
action in the Act's legislative history." Id. at 351, 63 S.Ct. at
313. The Court held, therefore, that federal antitrust laws were
not intended to reach state-regulated anticompetitive activities.
Id. at 350-52, 63 S.Ct. at 313-14; City of Columbia v. Omni
Outdoor Advertising, Inc., 499 U.S. 365, 370, 111 S.Ct. 1344, 1348,
113 L.Ed.2d 382 (1991).21
Thirty-seven years later, in California Retail Liquor Dealers
Ass'n. v. Midcal Aluminum, Inc., 445 U.S. 97, 100 S.Ct. 937, 63
L.Ed.2d 233 (1980), a unanimous Court established a two-pronged
test to determine when private party anticompetitive conduct is
entitled to state action immunity from antitrust liability: (1)
the conduct had to be performed pursuant to a clearly articulated
policy of the state to displace competition with regulation; and
(2) the conduct had to be closely supervised by the state. Id. at
105, 100 S.Ct. at 943; see also F.T.C. v. Ticor Title Ins. Co.,
504 U.S. 621, 112 S.Ct. 2169, 119 L.Ed.2d 410 (1992).22 These two
prongs are addressed below.
1. Clearly Articulated Policy of the State.
The Court set out the first element of state action immunity
in Southern Motor Carriers Rate Conference, Inc. v. U.S., 471 U.S.
48, 105 S.Ct. 1721, 85 L.Ed.2d 36 (1985). There, the Court
21
The Parker Court held that the purpose of the Sherman Act
"was to suppress combinations to restrain competition and
attempts to monopolize by individuals and corporations." The Act
did not prohibit anticompetitive restraints prescribed by the
states "as an act of government." 317 U.S. at 352, 63 S.Ct. at
314.
22
The clear articulation requirement ensures that antitrust
law will not be set aside unless the state does in fact intend to
displace competition, i.e., the challenged scheme does not simply
represent unsanctioned private conduct. See generally 1 P.
Areeda & D. Turner, Antitrust Law 207, 214 (1978). The active
supervision requirement ensures that even where there is state
authorization, such authorization constitutes more than mere
permission to violate the Sherman Act. A state may displace the
Act, but in doing so it must replace it with a scheme of state
regulation. Id. at 213.
determined that a private party acting pursuant to an
anticompetitive regulatory program need not "point to a specific,
detailed legislative authorization" for its challenged conduct.
Id. at 57, 105 S.Ct. at 1726. As long as the State as sovereign
clearly intends to displace competition in a particular field with
a regulatory structure, the first prong of the Midcal test is
satisfied. Id. at 64, 105 S.Ct. at 1730.
In this case, the district court found that Florida has two
statutory policies regarding power generation and transmission: a
policy favoring monopoly power in Florida electric utilities, and
a policy of encouraging development of Florida cogeneration
facilities, complemented by the implementation of PSC regulatory
guidelines. Fla.Stat. § 366.051 (1991). The district court found
that these statutes set out clearly articulated policies regarding
utilities and cogenerators. Accordingly, the district court found
that FPL had satisfied the first prong of the Midcal test, except
as to its Strategic Energy Business Study or SEBS. See supra n.
14.
We agree with the district court that Florida has an obvious
and clearly articulated policy to displace competition with
regulation in the area of power generation and transmission and
that FPL's conduct has been performed pursuant to that policy. The
Florida legislature gave the PSC broad authority to regulate FPL.
See Ch. 366, Fla.Stat. Further, the relationship between Florida
utilities and cogenerators has been subject to pervasive state
regulation through statute and regulatory rules. Fla.Stat. §
366.05(1), .04(1), (5), .06(1), .051 (1994); Fla.Admin.Code R. 25-
17.080-.091 (1988). A myriad of agency proceedings have
transpired.23 The field has not been left to the parties'
unfettered business discretion. In addition, the Florida Supreme
Court has been active in its role of judicial review. See C.F.
Industries, Inc. v. Nichols, 536 So.2d 234 (Fla.1988) (standby
rates for qualifying facilities); PW Ventures, Inc. v. Nichols,
533 So.2d 281 (Fla.1988) (third-party sales by qualifying
facilities); Storey v. Mayo, 217 So.2d 304, 307 (Fla.1968), cert.
denied, 395 U.S. 909, 89 S.Ct. 1751, 23 L.Ed.2d 222 (1969) ("The
powers of the Commission over ... privately-owned utilities [are]
omnipotent within the confines of the statute and the limits of
organic law.").
We disagree, however, with the district court's exclusion of
SEBS from its finding. It is clear that Florida intended to
displace competition in the utility industry with a regulatory
structure, Southern Motor Carriers, 471 U.S. at 64, 105 S.Ct. at
1730, and FPL's internal SEBS study has no relevance to the issue
of Florida's clearly articulated policy of regulation. Contrary to
the district court's ruling, we conclude that the first prong of
the state action defense is satisfied here, without qualification,
that is, including SEBS.24
23
The summary judgment record includes more than fifty PSC
orders dealing with issues germane to the utility/cogenerator
relationship.
24
SEBS examine alternatives in preparing for the future and
provide, for example, a good business plan for the possibility
that interest rates may fall, or the population growth rate of
Florida may rise. When FPL has finished its good business
planning, the reaction it takes to this planning will then be
subject to state regulation. If the end product of the SEBS is
illegal, the conduct will be struck down when the action is taken
2. Conduct Actively Supervised by the State.
This second prong of the state action defense applies when
the challenged conduct is by a private party rather than a
government official. Ticor, 504 U.S. at 630, 112 S.Ct. at 2175.
Active state involvement is the second precondition for antitrust
immunity; the conduct by the private party has to be closely
supervised by the state. Midcal, 445 U.S. at 105-06, 100 S.Ct. at
943-44. The active supervision requirement is designed to ensure
that the state has "ultimate control" over the private party's
conduct, with the power to review and disapprove, if necessary,
particular anticompetitive acts that may offend state policy.
Patrick v. Burget, 486 U.S. 94, 101, 108 S.Ct. 1658, 1663, 100
L.Ed.2d 83 (1988).
The district court considered FPL's conduct in three areas
alleged to be anticompetitive by the Cogenerators: (1) FPL's
refusal to wheel; (2) its use of rates; and (3) its alleged
interference with interconnection. It determined that for FPL to
meet the second prong of the state action defense, Florida, through
the PSC, must have "actively supervised, substantially reviewed, or
independently exercised judgment and control" over FPL's "overall
anti-competitive campaign."
In each of the three areas, the district court found that,
while the PSC had the power to review FPL's conduct, it was not
given the opportunity to exercise its power to review FPL's
conduct. Therefore, the district court determined that the PSC's
or proposed to the PSC. See City of Columbia, 499 U.S. at 376-
77, 111 S.Ct. at 1352.
regulatory authority (in application or as applied) did not satisfy
the second prong of the state action immunity standard.
As we conclude that the PSC did in fact exercise active
supervision over FPL, we do not discuss these areas separately, as
the same rationale applies to each.
3. The Active Supervision in this Case.
In 1987, the PSC denied Dade's petition to allow the
Cogenerators to wheel power to Hospital because they could not
satisfy the PSC self-service wheeling rules. In re: Petition of
Metropolitan Date County, Order No. 17510 (1987).25
The district court notes that FPL stands behind this PSC
ruling as conclusive evidence of active state supervision. The
district court finds this reliance misplaced. It focuses instead
on the circumstances leading up to the PSC hearing: FPL's acts
that have their genesis in the embryonic stages of Center when FPL
participated in the early negotiations of the Cogenerator-Dade
agreement. That is, under an estoppel-like analysis, the district
court found that, when FPL ostensibly gave its blessing to the
contract (with full knowledge that it contemplated: (1) the
wheeling of excess power by FPL to other Dade locations; (2) the
conveyance of power to other Dade facilities through a direct
transmission line; or (3) the sale of excess power to FPL at
avoided cost rates), it can't be heard to complain now. The
district court's determination is based, not on whether the PSC had
25
As Dade did not own the generating equipment, there was
not an exact identity of ownership between the generator of the
electricity on the one hand, and the ultimate consumer of the
electricity, on the other. Fla.Admin.Code, Rule 25-17.0882; PW
Nichols, 533 So.2d at 281.
the power to actively supervise and review FPL's conduct, but on
whether it was ever given the opportunity to exercise its power to
supervise and review (and possibly disapprove), these early acts of
FPL.26
That is not the issue. The issue is this: Has the State of
Florida, through its state regulatory agency, the PSC, actively
supervised FPL in the areas of wheeling, rates and interconnection?
The answer is clearly yes, as to each. The fact that FPL didn't
complain about wheeling or rates or interconnection when it first
reviewed the Center contract is not material as to whether or not
the PSC had the power to actively supervise FPL. That power is
insulated. FPL's failure to object does not take away from the PSC
its opportunity to exercise the power of active supervision.
Failure by the parties to commence an action or proceeding (at the
time when the district court apparently thought they should have
objected), does not constitute the nullification of the PSC's power
to act.
The PSC exercises its powers only when called upon to do so.
No call was made. For example, the decisions of this circuit
govern or control a plethora of legal issues—but if a particular
issue is never brought before us—it doesn't mean we don't have
control. We don't have opportunity—but we still have control. We
still have active supervision.
26
It is clear that the district court is pondering why FPL
was not heard to complain, from a legal standpoint, about this
cogeneration project when it was on the drawing board. We, too,
have wondered in amazement as to how this project, structured as
it was, made it this far. We can do no more than ponder,
however, as that is not the question before us.
The record is clear—the doors to the PSC were open to all with
standing to complain. Being met with a complaint, the PSC had the
full power to actively supervise. Whether or not the State,
through the PSC, exercises its control sua sponte is not material,
unless, of course, there is an apparent devious design to abdicate
or obstruct control, and that is not the case here. The record
shows that, when the PSC was called upon, they acted. We, the
judiciary, do not have to take a walk with the PSC members to see
if they visit FPL's offices every morning.
In sum, Florida has clearly articulated policies regarding the
relationship between FPL and the Cogenerators. In addition, the
record is clear that the PSC actively supervised all aspects of
FPL's alleged anti-competitive conduct. We conclude, therefore,
that both prongs of the state action immunity doctrine are
satisfied here and FPL's conduct is immune from antitrust liability
in each of the three areas of wheeling, rates and interconnection.
C. The Noerr/Pennington Doctrine of Immunity
Noerr/Pennington follows naturally from the state action
doctrine. While the state action doctrine protects private actions
authorized by the state, the Noerr/Pennington doctrine protects
private efforts to influence government officials in creating or
implementing legislation that has anticompetitive effects. This
so-called political action doctrine protects First Amendment rights
to assemble and petition government. It springs less from the
traditional power of the sovereign than from the rights of
individuals to petition the sovereign.27
In Eastern Railroad Presidents Conference v. Noerr Motor
Freight, Inc., 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961),
and United Mine Workers v. Pennington, 381 U.S. 657, 85 S.Ct. 1585,
14 L.Ed.2d 626 (1965), the Supreme Court held that concerted
efforts to restrain or monopolize trade by petitioning government
officials are protected from antitrust liability under the Sherman
Act. California Motor Transport Co. v. Trucking Unlimited, 404
U.S. 508, 92 S.Ct. 609, 30 L.Ed.2d 642 (1972).28 The litigation in
Noerr grew out of an "economic life or death" struggle between
railroads and the trucking industry for the lucrative long-distance
hauling of heavy freight. Noerr, 365 U.S. at 129, 81 S.Ct. at 525.
The truckers alleged that the railroads were behind a publicity
campaign designed to procure legislation that would hurt the
trucking industry. Id. The Noerr Court found that attempts by the
railroads to secure the passage and enforcement of anticompetitive
27
There are two main differences between the state action
doctrine and the Noerr/Pennington doctrine. When the government
chooses to displace competition without being petitioned to do so
by private parties, state action applies but Noerr/Pennington
does not. When private parties petition the government to
displace competition, but the government refuses to take such
action, Noerr/Pennington applies but state action does not.
Matthew R. Gutwein, The Commercial Exception: A Necessary
Limitation to the Noerr-Pennington Doctrine, 63 Ind.L.J. 401, 411
n. 68 (1987); see generally Daniel R. Fischel, Antitrust
Liability for Attempts to Influence Government Action: The Basis
and Limits of the Noerr-Pennington Doctrine, 45 U.Chi.L.Rev. 80,
82-88 (1977); (first name) Calkins, Developments in Antitrust
and the First Amendment: The Disaggregation of Noerr, 57
Antitrust L.J. 327 (1988).
28
In California Motor Transport, the Supreme Court extended
Noerr to attempts to petition administrative agencies and the
judiciary but limited Noerr protection in actions designed to
deny plaintiffs access to the courts and administrative agencies.
404 U.S. at 511-12, 92 S.Ct. at 612-13.
laws cannot form the basis for antitrust liability regardless of
any injury to truckers:
It is inevitable, whenever an attempt is made to influence
legislation by a campaign of publicity, that an incidental
effect of that campaign may be the infliction of some direct
injury upon the interests of the party against whom the
campaign is directed.... To hold that the knowing infliction
of such injury renders the campaign itself illegal would thus
be tantamount to outlawing all such campaigns.
Id. at 143-44, 81 S.Ct. at 532-33.29
The Supreme Court gave two reasons for its decision. First,
to the extent that state government has the power to restrain
trade, a contrary holding would be in direct conflict with the
state action doctrine. Id. at 137 and n. 17, 81 S.Ct. at 529 and
n. 17. Second, allowing such conduct to establish Sherman Act
liability might substantially impair First Amendment rights to
assemble and to petition the government. Id. at 137-38, 81 S.Ct.
at 529-30.
When the Supreme Court decided Pennington four years later,
it expanded Noerr to include efforts to petition the executive
branch and broadened the scope of protected behavior. 381 U.S. at
669, 85 S.Ct. at 1593. The Noerr doctrine, said the Pennington
Court, "shields from the Sherman Act a concerted effort to
influence public officials regardless of intent or purpose." Id.
at 670, 85 S.Ct. at 1593 (emphasis added). Furthermore, the Court
29
Private action that is a sham (not genuinely aimed at
procuring favorable government action) is not protected,
regardless of the forum. Noerr, 365 U.S. at 144, 81 S.Ct. at 533("There may be situations in which a publicity campaign,
ostensibly directed toward governmental action, is a mere sham to
cover what is actually nothing more than an attempt to interfere
directly with the business relationships of a competitor and the
application of the Sherman Act would be justified.").
held that "[j]oint efforts to influence public officials do not
violate the antitrust laws even though intended to eliminate
competition. Such conduct is not illegal, either standing alone or
as part of a broader scheme itself violative of the Sherman Act."
Id. (emphasis added). This immunity doctrine extends to the
lobbying of local legislators. City of Columbia, 499 U.S. at 379-
84, 111 S.Ct. at 1353-56. "[T]hat a private party's political
motives are selfish is irrelevant: "Noerr shields from the Sherman
Act a concerted effort to influence public officials regardless of
intent or purpose.' " Id. at 380, 111 S.Ct. at 1354, quoting
Pennington, 381 U.S. at 670, 85 S.Ct. at 1593.30
In Allied Tube & Conduit Corp. v. Indian Head, Inc., 486 U.S.
492, 108 S.Ct. 1931, 100 L.Ed.2d 497 (1988), the Supreme Court
began to differentiate between degrees of antitrust immunity for
acts of petitioning the government.31 It noted that the scope of
30
See also McGuire Oil Co. v. Mapco, Inc., 958 F.2d 1552,
1560 (11th Cir.1992) ("[I]t is axiomatic that actions taken with
an anti-competitive purpose or intent remain insulated from
antitrust liability under the Noerr-Pennington doctrine.")
(emphasis added).
31
Allied Tube involved the National Fire Protection
Association, a private standard-setting organization. It set
product standards and published fire protection codes that were
routinely adopted into law by state and local government. The
code permitted electrical conduits made of steel but not of
plastic. A plastics manufacturer proposed the adoption of
plastic conduits into the code as well. The proposal was
approved in committee. It could then be adopted by a simple
majority of association members at their annual meeting. Before
the vote, the nation's largest steel producer packed the annual
meeting with sympathetic no-voting members and the plastics
proposal was defeated. A jury found the steel manufacturer
liable for its actions. The district court granted a judgment
notwithstanding the verdict, reasoning that the steel
manufacturer was entitled to antitrust immunity under Noerr. The
Second Circuit reversed, refusing to extend Noerr immunity and
the Supreme Court agreed. Id.the protection depends upon the source, context, and nature of the
anticompetitive restraint at issue. Id. at 499, 108 S.Ct. at 1936.
Absolute immunity from antitrust liability results where the
restraint upon trade or monopolization is the result of valid
governmental action as opposed to private action. Id. Further,
where, independent of any government action, the anticompetitive
restraint results directly from private action, the restraint
cannot form the basis for antitrust liability if it is "incidental"
to a valid effort to influence governmental action. Id.
The Court found that Allied's efforts were not immune from
liability because they were essentially commercial in nature and
their political aspects were secondary. 32 It stated that "[w]hat
distinguishes this case from Noerr and its progeny is that the
context and nature of petitioner's activity make it the type of
commercial activity that has traditionally had its validity
determined by the antitrust laws themselves." Id. at 505, 108
S.Ct. at 1939.
Citing Allied Tube, Todorov v. DCH Healthcare Authority, 921
F.2d 1438 (11th Cir.1991) and Hill Aircraft & Leasing Corp. v.
Fulton County, 561 F.Supp. 667 (N.D.Ga.1982), aff'd, 729 F.2d 1467(11th Cir.1984), the district court in this case found that when
FPL lobbied the Commission to vote against construction of the
32
"[W]e think that, given the context and nature of the
conduct, it can more aptly be characterized as commercial
activity with a political impact. Just as the antitrust laws
should not regulate political activities "simply because those
activities have a commercial impact," [Noerr,] 365 U.S. at 141,
81 S.Ct. at 531, so the antitrust laws should not necessarily
immunize what are in essence commercial activities simply because
they have a political impact." 486 U.S. at 507, 108 S.Ct. at
1940.
Center-to-Hospital transmission line, its conduct fell within the
so-called commercial exception to Noerr because FPL didn't want to
lose Hospital as a valued customer. The district court reasoned
that FPL's legislative lobbying was not for political reasons but
for economic reasons; it violated state policies as it was in
direct contravention to Florida's policies promoting cogeneration;
it was aimed at a commercial purchasing decision by Dade; and it
was not a political or "policy" decision but a commercial or
pecuniary one. The district court also found that FPL's
participation in the negotiation of the Cogenerator-Dade contract
was not protected by Noerr immunity.33
We conclude that the district court's reliance in this case
on Allied Tube, Todorov and Hill Aircraft to formulate a commercial
exception to Noerr/Pennington as the law of this circuit is
misplaced. The district court has misreadAllied Tube and extended
it in an inappropriate way; in addition, neitherTodorov34 nor Hill
Aircraft35 expressly discuss Noerr in more than dicta.
33
The district court accepted the Noerr defense, however,
with respect to FPL's lobbying of the PSC to deny the
Cogenerators' self-service wheeling claim, apparently on the
basis that the Cogenerators had conceded that FPL's lobbying
efforts during the PSC hearings were immune from antitrust
liability.
34
Todorov is distinguishable as it did not involve
legislative lobbying but rather the lobbying of a hospital peer
group committee. Furthermore, the Todorov panel limited its
discussion of Noerr to a footnote, 921 F.2d at 1446 n. 14,
declined to rule on the Noerr issue, and affirmed the district
court on other grounds, id.
35
The district court decision in Hill Aircraft was affirmed
by this court without discussion. Moreover, the district court
in Hill Aircraft expressly distinguished the facts before it from
those involving legislative lobbying. 561 F.Supp. at 675.
Allied Tube involved a private standard-setting association
and not a governmental entity or legislative body. And, while it
is true that the fire code standards in Allied Tube were routinely
adopted into law by a substantial number of state and local
governments, that does not transform the private association into
a legislative body or even a "quasi-legislative" body. In
addition, Allied Tube did not involve any governmental lobbying.
While it is true under Allied Tube that one must look not only to
the activity's "impact, but also [to] the context and nature of the
activity," Order at 44, quoting 486 U.S. at 504, 108 S.Ct. at 1939,
the Supreme Court continues on to state that "[lobbying] in the
open political arena, where partisanship is the hallmark of
decisionmaking," is immune, whereas lobbying "within the confines
of a private [i.e., non-governmental] standard-setting process" may
not be immune. Id.36
The Supreme Court and this circuit have never expressly
considered the validity of what has been referred to as the
commercial exception to the Noerr/Pennington doctrine and we are
not required to do so now. We conclude that FPL's conduct is
protected under Noerr/Pennington and does not fall under any
exception, commercial or otherwise. The district court's rejection
of Noerr/Pennington immunity because of a perceived commercial
exception was in error.
Second, FPL has a constitutional right to petition its
36
Allied Tube actually supports FPL's position, that is,
they were immune from antitrust liability when they lobbied
Commission, an "open political arena," or Dade's legislative
body.
governing legislative bodies. FPL lobbied Commission to vote
against constructing the separate transmission line; the
Cogenerators lobbied Commission to vote for construction. FPL's
motivation to speak out against building the line is irrelevant.37
It is obvious that FPL had a self-interest in protecting its energy
customer base; to lose Hospital as a customer would have cost FPL
thousands of dollars a year in lost revenues. The fact that this
lobbying was in FPL's commercial best interest is beside the point.
City of Columbia, 499 U.S. at 380, 111 S.Ct. at 1354 (that a
private party's political motives are selfish is irrelevant).
The district court found it significant that FPL lobbied a
legislative body for a specific purpose—construction of a
transmission line—rather than passage of favorable legislation in
general. That is not significant. The First Amendment protections
of Noerr do not turn on whether one petitions for governmental
action in general or for specific legislative action. Legislative
lobbying is protected, "either standing alone or as part of a
broader scheme itself violative of the Sherman Act." Pennington,
381 U.S. at 670, 85 S.Ct. at 1593; see also City of Columbia, 499
U.S. at 381, 111 S.Ct. at 1354.
In sum, we look to the conduct, not the intent or motivation
behind the conduct. The fact that FPL had a pecuniary interest in
the outcome of the lobbying or that the lobbying was for a specific
purpose does not matter, it merely begs the question. And, suffice
37
In reality, FPL should be expected to speak out;
otherwise, the PSC could find that FPL wasn't protecting its
energy customer base, and, subject FPL to serious penalty if, as
a result, electric rates to consumers were driven up.
it to say that a circumstance might one day present itself that
could amount to conduct not protected under Noerr/Pennington as
some sort of commercial exception. That is not the case here. We
conclude that FPL's conduct in lobbying the Commission against the
construction of a separate transmission line is constitutionally
protected under the Noerr/Pennington doctrine of immunity.
V. CONCLUSION
For the reasons stated above, under both the state-action and
the Noerr/Pennington immunity doctrines, we conclude that FPL's
conduct concerning the Cogenerators is immune from antitrust
liability in each of the areas of wheeling, rates, interconnection,
and lobbying. We reverse the district court's denial of FPL's
motion for summary judgment in these four areas. As this ruling
does not entirely resolve the dispute before us, however, we leave
all remaining issues for determination upon remand.
The decision of the district court is reversed. The case is
remanded for further proceedings consistent with this opinion.
REVERSED and REMANDED.