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Wallen v. St. Louis Metropolitan Taxicab Commission

United States District Court, E.D. Missouri, Eastern Division

September 30, 2016

MARSHA ROBYN WALLEN, et al., Plaintiffs,



         This matter is before the Court on Defendants Metropolitan Taxicab Commission of Metropolitan St. Louis, (MTC), Asfaw, Hamilton, McNutt, and Rudawsky's Motion to Dismiss or, in the Alternative, A Judgment on the Pleadings, [Doc. No. 39], Defendants St. Louis County and Yellow Cab Company, Best Transportation, Inc., Best Black Car, LLC, and Best Sedan Services, LLC's Motion to Dismiss, [Doc. No. 41] and Gateway Taxi Management Company, d/b/a Laclede Cab Company's Motion to Dismiss, [Doc. No. 45], (Collectively, the Taxi Defendants). Plaintiffs oppose the motions. For the reasons set forth below, the MTC and Individual Defendant's Motion is denied. The Taxi Defendants' Motions are granted.

         Facts and Background

         Plaintiffs brought this action alleging violations of the Sherman Act, 15 U.S.C. § 1, by Defendants in Defendants attempt to prohibit Uber and those using the uberX product from operating in the City and County of St. Louis, Missouri. Plaintiffs claim that riders, drivers and Uber, a Transportation Network Company, (TNC) are prohibited by the actions of Defendants from competing in the St. Louis market for-hire transportation. Plaintiffs claim to bring this antitrust action to put “an end to the anticompetitive conduct of Defendant MTC and several of its commissioners (the “Commissioner Defendants”), many of whom are active market participants in the very market that the MTC regulates.” According to Plaintiffs, acting under the control of these market-participant members, the MTC, which is vested with the authority to regulate vehicles for hire, their drivers, and vehicle-for-hire companies in the City of St. Louis and St. Louis County, has abused its authority in order to stifle competition.

         Defendant MTC and the individual commissioners move to dismiss based on immunity from suit. The Taxi Defendants move to dismiss move based on a failure to state a claim under a theory of respondeat superior, and immunity.

         Legal Standard

         The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim is to test the legal sufficiency of a complaint so as to eliminate those actions “which are fatally flawed in their legal premises and deigned to fail, thereby sparing litigants the burden of unnecessary pretrial and trial activity.” Young v. City of St. Charles, 244 F.3d 623, 627 (8th Cir. 2001) (citing Neitzke v. Williams, 490 U.S. 319, 326-27 (1989)). “To survive a motion to dismiss, a claim must be facially plausible, meaning that the ‘factual content...allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.' ” Cole v. Homier Dist. Co., Inc., 599 F.3d 856, 861 (8th Cir. 2010) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). The Court must “accept the allegations contained in the complaint as true and draw all reasonable inferences in favor of the nonmoving party.” Id. (quoting Coons v. Mineta, 410 F.3d 1036, 1039 (8th Cir. 2005)). However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, ” will not pass muster. Iqbal, 556 U.S. at 678.



         “Every contract, combination in the form of a trust or otherwise, or conspiracy, in restraint of trade” is illegal under § 1 of the Sherman Act. 15 U.S.C. § 1. Section 1 is not read literally, but rather prohibits only “unreasonable” restraints of trade. Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006) (emphasis in original) (citations omitted). Thus, courts “presumptively appl[y] the rule of reason analysis, under which antitrust plaintiffs must demonstrate that a particular contract or combination is in fact unreasonable and anticompetitive before it will be found unlawful.” Id.

         The antitrust laws do not, however, bar sovereign states from imposing market restraints “as an act of government.” Parker v. Brown, 317 U.S. 341, 352 (1943). Because cities, towns, and other political subdivisions are not themselves sovereign, the Supreme Court has made clear that Parker does not apply directly to them. See Columbia v. Omni Outdoor Advertising, Inc., 499 U.S. 365, 370, (1991); Lafayette v. La. Power & Light Co., 435 U.S. 389, 411-13 (1978) (plurality opinion). Rather, substate governmental entities receive immunity from antitrust scrutiny only when they act “pursuant to state policy to displace competition with regulation or monopoly public service.” Lafayette, 435 U.S. at 413. This rule is designed to preserve to the States “their freedom ... to use their municipalities to administer state regulatory policies free of the inhibitions of the federal antitrust laws without at the same time permitting purely parochial interests to disrupt the Nation's free-market goals.” Id. at 415-16.

         The Supreme Court addressed antitrust immunity for substate governmental entities in FTC v. Phoebe Putney Health Sys. Inc., __U.S.__, 133 S.Ct. 1003 (2013). In Phoebe, the Supreme Court reiterated that “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.” Phoebe, 133 S.Ct. at 1011 (quoting Cmty. Commc'ns Co. v. Boulder, 455 U.S. 40, 52 (1982)). The “clear articulation” test requires that the anticompetitive effect of the challenged action be a “foreseeable result” of what the state authorized. Id. Mere state-law authorization to act is insufficient to establish state action immunity; “the substate governmental entity must also show that it has been delegated authority to act or regulate anticompetitively.” Phoebe, 133 S.Ct. at 1012 (citing Omni, 499 U.S. at 372)

         The Court has acknowledged that it would be “unrealistic” to “require state legislatures to explicitly authorize specific anticompetitive effects before state action immunity could apply” because “‘[n]o legislature can be expected to catalog all of the anticipated effects' of a statute delegating authority to a substate governmental entity.” Phoebe, 133 S.Ct. at 1012 (emphasis added) (quoting Hallie, 471 U.S. at 43). “Instead, we have approached the clear-articulation inquiry more practically, but without diluting the ultimate requirement that the State must have affirmatively contemplated the displacement of competition such that the challenged anticompetitive effects can be attributed to the ‘state itself.'” Id. at 1013 (quoting Parker, 317 U.S. at 352). “[A] state policy to displace federal antitrust law [is] sufficiently expressed where the displacement of competition [is] the inherent, logical, or ordinary result of the exercise of authority delegated by the state legislature.” Phoebe, 133 S.Ct. at 1012-13. “In that scenario, the State must have foreseen and implicitly endorsed the anticompetitive effects as consistent with its policy goals.” Id. at 1013.

         More recently, the Supreme Court has had occasion to again address Parker immunity in North Carolina State Board of Dental Examiners v. ...

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