United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY UNITED STATES DISTRICT JUDGE
USA, Inc. has sued the Hammond Water Works Department,
arguing that the Department's refusal to provide water
for Gelita's Illinois manufacturing plant at a reasonable
rate violates Indiana law and the Commerce Clause of the
United States Constitution. The Department has moved for
judgment on the pleadings. For the reasons set forth below,
the Court grants the motion.
following facts are drawn from Gelita's allegations in
its amended complaint, which the Court accepts as true for
the purposes of the Department's motion for judgment on
the pleadings. See Bishop v. Air Line Pilots Ass'n,
Int'l, 900 F.3d 388, 400 (7th Cir. 2018).
Hammond Water Works Department is a municipally owned utility
that operates a water filtration plant in northwest Indiana.
The Department's sole customer outside the state of
Indiana is Gelita, which operates a gelatin manufacturing
facility in Illinois near the Indiana border. The Department
has supplied water to Gelita (or predecessor businesses on
the same site) for over one hundred years.
Indiana Utility Regulatory Commission authorizes the rates
that the Department may charge for its services. Since 1985,
Gelita has paid a graduated rate of about 38 cents per
thousand gallons, which accords with the current schedule of
charges previously approved by the regulatory commission. By
statute, the Department is required to charge rates that are
"nondiscriminatory, reasonable, and just." Ind.
Code § 8-1.5-3-8(b).
2012, the Department has sought to significantly raise the
rate it charges Gelita. Gelita has refused, and the parties
have been unable to negotiate a mutually agreeable rate. In
2018, Gelita filed the present lawsuit, alleging that the
Department's efforts to charge a rate higher than the one
approved by the regulatory commission violate the United
States Constitution and Indiana state law. The Department has
moved for judgment on the pleadings under Federal Rule of
Civil Procedure 12(c).
standard for entering judgment on the pleadings is the same
as that for dismissing a complaint for failure to state a
claim: the complaint must state a claim that is plausible on
its face." Armada (Singapore) PTE Ltd. v. Amcol
Int'l Corp., 885 F.3d 1090, 1092 (7th Cir. 2018)
(internal quotation marks omitted). The Court considers only
"the matters presented in the pleadings" and
"must consider those pleadings in the light most
favorable" to the non-moving party. Unite Here Local
1 v. Hyatt Corp., 862 F.3d 588, 595 (7th Cir. 2017).
response brief, Gelita has voluntarily withdrawn its claim in
count 2 for violations of the Privileges and Immunities
Clause of Article IV of the Constitution. The Court therefore
dismisses count 2.
Dormant Commerce Clause claim
count 1, Gelita alleges that the Department's effort to
charge a higher rate to an out-of-state customer violates the
dormant Commerce Clause, which "precludes states from
discriminat[ing] between transactions on the basis of some
interstate element." Comptroller of Treasury of Md.
v. Wynne, 135 S.Ct. 1787, 1794 (2015) (alteration in
original) (internal quotation marks omitted).
Market participant doctrine
Department argues that Gelita cannot prevail on its dormant
Commerce Clause claim because the Department is acting as a
market participant. "[W]hen a state or local government
enters the market as a participant it is not subject to the
restraints of the Commerce Clause." White v. Mass.
Council of Constr. Emp'rs, Inc., 460 U.S. 204, 208
(1983). The market participant doctrine "reflects a
basic distinction . . . between States as market participants
and States as market regulators, [t]here [being] no
indication of a constitutional plan to limit the ability of
the States themselves to operate freely in the free