AAI Tells Supreme Court: Don’t Make Litigating the State-Action Defense More Burdensome for Antitrust Plaintiffs (Salt River v. Tesla Energy Operations, No. 17-368)

The American Antitrust Institute (AAI) filed an amicus brief asking the U.S. Supreme Court to deny “public entities” a special right to an immediate, automatic appeal whenever they lose a motion claiming they are exempt from Sherman Act liability under the state-action doctrine. AAI argues that allowing an automatic appeal would significantly burden antitrust plaintiffs and the judicial system and is not warranted under the law.

The case involves a Section 2 complaint brought by solar-panel supplier SolarCity against the Salt River Project Agricultural and Power District (the District), which is a political subdivision of the State of Arizona that supplies electric power to residents in the Phoenix metropolitan area. The District moved to dismiss the complaint on a variety of grounds, including the state-action defense.

The trial court rejected the defense and declined to certify an interlocutory appeal because it did not believe the state-action issue involved a close question of law. The Ninth Circuit dismissed the District’s attempt to appeal the state-action order under the “collateral-order doctrine,” which allows an immediate appeal as of right for a small class of orders that frequently involve a right “not to be tried.”

The “collateral order” question before the Supreme Court is particularly significant because it applies to all “public entities,” including those controlled by market participants, and the logic of the District’s argument for immediate appeals would also apply to purely private parties.

The AAI brief argues that the policies underlying the state-action doctrine and sound judicial administration militate against allowing automatic appeals of state-action denials as of right.

Allowing automatic interlocutory appeals would create large burdens on antitrust plaintiffs and the public caused by delay and increased costs, because defendants would have strong incentives to appeal every denial, even if it is obviously correct. These burdens substantially outweigh the meager benefits of allowing immediate appeal in every case, particularly because potentially meritorious appeals can be certified for appeal by the district court.

Moreover, local government entities (like the District) and their officials are immune from damages under the Local Government Antitrust Act, which minimizes the burdens on defendants and also indicates Congress’s intent not to provide special appeal rights.

The brief also argues that state-action denials do not satisfy the collateral-order test. Among other things, such orders do not “imperil” sovereign States’ federalism interests, particularly when the defendant is a municipality (which is not sovereign), nor do they imperil other interests the Court has previously recognized to be important enough to warrant collateral-order treatment.

The brief was written by AAI Vice President and General Counsel Rick Brunell and Associate General Counsel Randy Stutz, with assistance from AAI research fellows Mark Angland and So Young Oh.