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Solar City Corp. v. Salt River Project Agricultural Improvement and Power District

United States District Court, D. Arizona

December 21, 2015

Solar City Corporation, Plaintiff,
v.
Salt River Project Agricultural Improvement and Power District, et al., Defendants.

ORDER

Before the Court are Defendant Salt River Agricultural Improvement and Power District’s (the “District”) Motion for Certification under 28 U.S.C. § 1292(b), (Doc. 82), and Motion to Stay, (Doc. 83). The motions are fully briefed, and neither party requested oral argument. For the reasons below, both motions are denied.

BACKGROUND

Plaintiff SolarCity Corporation, a manufacturer and distributor of solar panels, filed suit against the District and the Salt River Valley Water Users’ Association (the “Association”) alleging violations of federal and state antitrust laws. (Doc. 39.) SolarCity alleges that the District and the Association, operating as the Salt River Project (“SRP”), exercise monopoly power over the sale of retail electricity in the greater Phoenix-metro area. (Id., ¶¶ 1-2.) It claims SRP imposed a fee that makes it economically infeasible for customers to obtain some of their electricity from solar systems and that the fee has the effect of eliminating competition from SolarCity and other solar companies in the market. (Id., ¶¶ 4, 13.)

The District and the Association both filed motions to dismiss, which raised several immunities based on the District’s status as a political subdivision of the State of Arizona. (Docs. 52, 53.) On October 27, 2015, the Court dismissed the Association and several of SolarCity’s antitrust claims. (Doc. 77.) It also found that the Local Government Antitrust Act (“LGAA”) barred SolarCity’s claims for damages under federal antitrust law because the District is a political subdivision of Arizona, but denied the District’s motion with respect to the remaining immunity defenses. (Id. at 22-26.) SolarCity’s claims for equitable relief under § 2 of the Sherman Act (monopolization and attempted monopolization) and damages claims under state antitrust and tort law survived. The District now moves for the Court to certify three issues for interlocutory appeal pursuant to 28 U.S.C. § 1292(b): (1) whether it is immune from all remaining claims under the state action doctrine, (2) whether it is immune from all damages claims under Arizona Revised Statute (“A.R.S.”) § 12-820.01, and (3) whether it immune from all remaining claims under the filed-rate doctrine. (Doc. 82.) The District also requests that the Court stay the case pending its appeal. (Doc. 83.)

LEGAL STANDARD

Under § 1292(b), the district court shall state in a non-appealable order if the court is of the “opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation[.]” 28 U.S.C. § 1292(b). The “requirements of § 1292(b) are jurisdictional, ” and the procedure is a “narrow exception to the final judgment rule[.]” Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010) (internal quotations omitted). “The party seeking certification has the burden of showing that exceptional circumstances justify a departure from the ‘basic rule of postponing appellate review until after the entry of a final judgment.’” Fukuda v. L.A. Cty., 630 F.Supp. 228, 229 (C.D. Cal. 1986) (quoting Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978)). “[A] party’s strong disagreement with the Court’s ruling is not sufficient for there to be a ‘substantial ground for difference.’ [In addition, ] [t]hat settled law might be applied differently does not establish a substantial ground for difference of opinion.” Couch, 611 F.3d at 633.

ANALYSIS

I. Motion for § 1292(b) Certification

The District argues that each immunity issue satisfies the requirements of § 1292(b). It claims that resolution of these issues would avoid the risk of piecemeal litigation and multiple appeals, which would lower the costs and burden for both the parties and the Court. (Doc. 82 at 2.) The Court disagrees.

A. State-Action Immunity

State-action immunity “exempts qualifying state and local government regulation from federal antitrust, even if the regulation at issue compels an otherwise clear violation of the federal antitrust laws.” Cost Mgmt. Servs. v. Wash. Nat. Gas Co., 99 F.3d 937, 941 (9th Cir. 1996) (internal quotation marks omitted). The doctrine originated in Parker v. Brown, 317 U.S. 341 (1943), in which the Supreme Court found that the “Sherman Act was not intended to apply to acts of the States ‘as sovereigns.’” Springs Ambulance Serv., Inc. v. City of Rancho Mirage, Cal., 745 F.2d 1270, 1272 (9th Cir. 1984). But “this state-action immunity does not apply automatically to the state’s political subdivisions.” Id. “As with private parties, immunity will only attach to the activities of local governmental entities if they are undertaken pursuant to a ‘clearly articulated and affirmatively expressed’ state policy to displace competition.” F.T.C. v. Phoebe Putney Health Sys., Inc., 133 S.Ct. 1003, 1011 (2013). “[G]iven the fundamental national values of free enterprise and economic competition that are embodied in the federal antitrust laws, ‘state-action immunity is disfavored[.]’” Id. at 1010 (quoting F.T.C. v. Ticor Title Ins. Co., 504 U.S. 621, 636 (1992)).

The District argues that the question of state-action immunity is a controlling question of law because, if it applies, it bars all of SolarCity’s antitrust claims.[1] An issue is “controlling” if its resolution on appeal “could materially affect the outcome of litigation in the district court.” In re Cement Antitrust Litig., 673 F.2d 1020, 1026 (9th Cir. 1982). Because equitable relief under the federal antitrust laws is the crux of SolarCity’s case, the Court concludes that application of state-action immunity is a controlling question of law under § 1292(b). See Springs Ambulance, 745 F.2d at 1272 (granting permission for interlocutory appeal of district court’s order denying state-action immunity on motion to dismiss after district court found that it is a controlling issue of law). However, the Court finds that the District has failed to demonstrate a substantial ground for difference of opinion on this issue.

In ruling on the motion to dismiss, the Court concluded that whether Arizona has articulated a clear policy permitting the District’s conduct is a question of fact and noted that SolarCity had adequately alleged that Arizona has no such policy. (Doc. 77 at 25.) The District argues that the “clear articulation” prong is a question of law that the Court should have decided in its Order. The Court agrees with the District. “[T]he state-action immunity question is one of law that turns on whether the displacement of competition with monopolies in the [relevant] market was ‘clearly articulated and affirmatively expressed as state policy.’” Columbia Steel Casting Co. v. Portland Gen. Elec. Co., 111 F.3d 1427, 1442 (9th Cir. 1996).

However, correction of this error on appeal would not materially advance the ultimate termination of the litigation because there is no substantial ground for difference of opinion that the District’s alleged conduct is not protected by state-action immunity. Had the Court decided the issue as a matter of law, it would have found that Arizona has not expressly articulated a clear policy authorizing the conduct of the District. See Cost Mgmt., 99 F.3d at 942 (“the relevant question is whether the regulatory structure which has been adopted by the state has specifically authorized the conduct alleged to violate the Sherman Act”). In fact, the opposite is true. A.R.S. § 40-202(B), cited by SolarCity in its response to the District’s motion to dismiss, provides that “[i]t is the public policy of this state that a competitive market shall exist in the sale of electric generation service.” The District did not address this statute in its reply brief, even though, as the moving party, it had the ...


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