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Commercial – State-sanctioned anticompetitive conduct not actionable

By: S.C. Lawyers Weekly staff//February 2, 2021

Commercial – State-sanctioned anticompetitive conduct not actionable

By: S.C. Lawyers Weekly staff//February 2, 2021

Because the Virginia legislature has conferred broad authority on local governing bodies to engage in anticompetitive conduct in the EMS vehicle services market, antitrust claims against the City of Richmond, stemming from its denial of an ambulance company’s permit to operate EMS vehicles, were dismissed.


For almost 30 years, the Richmond Ambulance Authority, or RAA, has provided nonemergency medical transportation services to the VA medical center. In 2018, however, the medical center requested quotes from other service providers. It ultimately selected Metro Health’s bid on the condition that Metro Health could obtain a permit from the city to operate emergency medical services vehicles.

When the city refused to grant Metro Health a permit, Metro Health brought this action against the city and the RAA, alleging violations of the Sherman Antitrust Act and the Supremacy Clause of the United States Constitution. The district court dismissed the case with prejudice.


Metro Health primarily contends that the city and the RAA have run afoul of the Sherman Act prohibition on monopolization and attempted monopolization. If, as the defendants assert and the district court found, the state action immunity doctrine shields them from federal antitrust liability, Metro Health cannot succeed on these claims.

Here, the Virginia legislature has expressly conferred broad authority on local governing bodies to engage in anticompetitive conduct in the EMS vehicle services market. A local government may make it unlawful to operate EMS vehicles without a permit, control the issuance of permits, determine where EMS vehicles can and cannot operate and fix the prices of EMS vehicle services. In these circumstances, anticompetitive conduct is the “foreseeable result” of the state’s policy. Accordingly, the city and the RAA are entitled to state action immunity.

Metro Health offers several arguments in an attempt to avoid this straightforward conclusion. First, Metro Health argues that Va. Code Ann. § 32.1-111.14 only authorizes localities to regulate “emergency medical services,” not “nonemergency service[s]” like pre-scheduled interfacility transports. Not so. In fact, multiple provisions of the statute make clear that localities may regulate “emergency medical services vehicles,” irrespective of whether the vehicles are engaged in emergency or nonemergency services.

Second, Metro Health contends that F.T.C. v. Phoebe Putney Health Sys., Inc., 568 U.S. 216 (2013), announced a heightened clear-articulation test that the defendants cannot meet. This argument also fails.

Third, Metro Health maintains that both the city and the RAA must, and cannot, demonstrate that their conduct was “actively supervised by the State.” But courts only demand this additional showing from “nonsovereign actor[s] controlled by active market participants,” like “private trade associations vested by States with regulatory authority.” Municipalities—like the city—and “substate governmental entities”—like the RAA—“are not subject to the ‘active state supervision requirement’ because they have less of an incentive to pursue their own self-interest under the guise of implementing state policies.”

Finally, Metro Health proposes that the court adopt a novel “market participant” exception to state action immunity. The Supreme Court has never recognized such an exception; in fact, it has suggested only that it might possibly exist. Nor have any of the Courts of Appeals ever concluded that this proposed exception frustrates the invocation of state action immunity, though some have noted that it would, if recognized, introduce considerable tension into federal antitrust law. Given this unmistakable friction with longstanding Supreme Court precedent, the court declines Metro Health’s invitation to steer federal antitrust law into uncharted waters.

Supremacy Clause

Metro Health also contends that by “[thwarting] the [VA Medical Center’s] competitive bidding process,” the city and the RAA have violated the Supremacy Clause. In Metro Health’s telling, the defendants’ conduct conflicted with the Competition in Contracting Act, or CICA. For its contention that the CICA preempts defendants’ conduct, Metro Health invokes “conflict preemption,” which can occur when “‘state law stands as an obstacle to the accomplishment of the full purposes and objectives’ of federal law.” But here, state law posed no obstacle at all.

Rather, as the VA medical center repeatedly made clear, there would be no contract unless Metro Health first obtained a permit from the city. Where, as here, a federal agency, of its own volition, imposes a contract condition consistent with federal law, the Supremacy Clause is not implicated.


Western Star Hospital Authority v. City of Richmond, Virginia (Lawyers Weekly No. 001-014-21, 12 pp.) (Diana Gribbon Motz, J.) Appeal No. 19-1977. Jan. 19, 2021. From E.D. Va. (John A. Gibney Jr., J.) Luke Andrew Hasskamp for Appellant. Craig Thomas Merritt and Wirt Peebles Marks IV for Appellees.

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