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VICKERY MANOR SERVICE v. VILLAGE OF MUNDELEIN

December 13, 1983

VICKERY MANOR SERVICE CORPORTATION, ET. AL., PLAINTIFFS
v.
VILLAGE OF MUNDELEIN, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Grady, District Judge.

AMENDED MEMORANDUM OPINION

This is an action under § 2 of the Sherman Act; § 3(3) of the Illinois Anti-Trust Act; 42 U.S.C. § 1983; article I, § 2 of the Illinois Constitution; and for interference with prospective business s advantage. Defendants have brought his motion to dismiss, claiming that under Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), they are immune from liability for the challenged actions.*fn1 Because defendants submitted materials outside of the pleadings with their motion, under Rule 12 we must treat this as a motion for summary judgment. However, for purposes of the motion, defendants have not disputed plaintiffs' statement of the facts, which we therefore assume to be true. We deny the motion.

FACTS

Plaintiffs are Vickery Manor Service Corporation ("Vickery Manor") and the legal and beneficial owners of certain land located in the Village of Mundelein (the "Village"). Vickery Manor is a privately-owned public utility company in the business of treating sewage. Vickery Manor is certificated by the Illinois Commerce Commission to provide this service in an area which includes the Village. Defendants are the Village, an Illinois municipal corporation; its administrator and trustees; and its sewage treatment plant operator.

Beginning in 1976 and continuing through 1980, the plaintiff-landowners entered into negotiations with Anden Corporation ("Anden"), a California corporation, for the sale of their land. Anden intended to purchase the land and to develop it for housing. Prior to purchasing the land, Anden met with Village officials in an attempt to ensure that once it bought the land, it would be able to obtain the necessary permits and approvals from the Village to develop it. Vickery Manor was prepared to provide sewage treatment service to the users of this would be development.

Plaintiffs allege also that the Village has taken other action designed to interfere with Vickery Manor's business, including: directing defendant Eaton (the Village's sewage treatment plant operator) to stop working for Vickery Manor; declining to repair the Village water main which provides water to Vickery Manor; and discouraging potential industrial users in and around Vickery Manor's certificated area from using or seeking to use Vickery Manor's services.

Plaintiffs' complaint alleges that the defendants' actions were calculated to put Vickery Manor out of business and to establish the Village's monopoly on sewage treatment service.

DISCUSSION

A. Controlling Case Law

Defendants argue that their actions are not redressable under the antitrust laws because of the state action doctrine of Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and its progeny. In Parker, the Supreme Court held that the Sherman Act did not reach actions directed by a state legislature. In City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 98 S.Ct. 1123, 55 L.Ed.2d 364 (1978), a plurality of the Supreme Court held that while municipalities did not enjoy the same exemption from the Sherman Act as did states, municipalities were protected from antitrust liability when they acted "pursuant to state policy to displace competition with regulation or monopoly public service." 435 U.S. at 413, 98 S.Ct. at 1137. That policy need not be spelled out in great detail; the necessary state policy 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, quoting from City of Lafayette, Louisiana v. Louisiana Power & Light Company, 532 F.2d 431, 434 (5th Cir. 1976).

The City of Lafayette plurality opinion became the majority rule in Community Communications Co., Inc. v. City of Boulder, Colorado, 455 U.S. 40, 102 S.Ct. 835, 70 L.Ed.2d 810 (1982). There the Court added the requirement that to be exempt under the Sherman Act the municipal action must be "in furtherance or implementation of clearly articulated and affirmatively expressed state policy." 455 U.S. at 52, 102 S.Ct. at 841.

B. "State Action" Immunity as Applied

In City of Lafayette, the Court did not apply its rule of law to a fact situation but merely affirmed the appeals court's holding that the district court should determine whether the city's actions were directed by the state. In City of Boulder, however, the Court did apply the "state action" doctrine. In City of Boulder, a cable television company had, pursuant to city ordinance, provided cable service for certain Boulder residents for 14 years. In the late 1970s, when markedly improved technology became available, the company decided to expand its business into other areas of the city and so informed the Boulder city council. Although until that time no other company had served the Boulder area, in 1979 a potential competitor also wrote to the council expressing interest in providing cable television service throughout the city. In response, the city enacted an emergency ordinance prohibiting the original company from expanding its business into other areas of the city for three months. The original company filed suit seeking a preliminary injunction to prevent the city from enforcing its ordinance, arguing ...


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