Miller's Pond Co., LLC v. City of New London
Miller's Pond Co., LLC v. City of New London
Opinion of the Court
Opinion
The principal issue in this appeal is whether the trial court properly determined that the defendants, the city of New London (city), the New London water and water pollution control authority (New London water authority), the town of Waterford, and the Waterford water pollution control authority (Waterford water authority), are immune from antitrust liability under General Statutes § 35-31 (b)
The record reveals the following facts and procedural history.
Since 1988, the plaintiffs have been seeking to sell or develop the pond as a water source for utilities in the region or as a private water supply for industrial or recreational facilities. Indeed, in 1998, Miller’s Pond Company entered into an agreement with the Connecticut Water Company to develop the sale and distribution of either raw or treated water from the pond in the New London region. The potential market in the region is controlled, however, by the defendants.
The city previously had supplied water to Waterford from sources owned and controlled by the city until December, 1986, when the long-term supply contract expired. During renegotiations of that agreement, Waterford informed the city that it intended to develop its own water supply system using the pond as the primary water source. The city opposed this plan, and in April, 1988, it imposed a moratorium on new water connections in Waterford, which was to remain in place until Waterford signed a new water service agreement with the city. Thereafter, Waterford abandoned its efforts to supply its water independently and, in October, 1988, it signed a new agreement for a term of forty-eight years (1988 agreement).
The 1988 agreement defined the water supply relationship between the city and Waterford. Its stated purpose is “to provide the terms and conditions pursuant to which (1) the [c]ity will supply water to water consumers in [Waterford]; (2) other municipalities in New London County may have the opportunity to receive
The city also has an agreement to supply water to portions of the town of Montville. By its terms, the agreement required Montville to enter into a separate agreement with Waterford for the use of Waterford supply facilities needed for the city to deliver water to Montville.
In regulatory submissions to the department of public health addressing planning matters, both Waterford and the city have recognized the pond as an existing or future component of their water supply systems. The city included the pond in its plan in 1988 as a direct response to a notice from a realtor that the pond might be offered for sale on the open market.
As previously noted, the plaintiffs have been attempting to develop the pond either as a water source for the region or as a private supply for industrial or recreational facilities since 1988. They allege, however, that the defendants have, in accordance with the “best efforts to deter the construction and operation of new [independent [w]ater [s]ystems” clause in the 1988 agreement, interfered with their development efforts in a variety of ways. For example, in December, 1998, the plaintiffs and representatives from the Connecticut Water Company met with the New London water authority and offered to enter into an agreement to sell water to the city. The city rejected this offer and refused to deal; in February, 1999, the chief administrator of the New London water authority threatened to use eminent domain proceedings if the plaintiffs did not sell the pond to the city.
In February, 1998, the city filed an application with the department of environmental protection to divert waters from Hunts Brook, which is located upstream from the pond. Had that department granted this application, it would have reduced the flow of water into the pond by approximately 8 million gallons per day, and reduced the safe yield of the pond by one third. In May, 1998, the plaintiffs announced their intention to develop the pond similarly, and subsequently, in November, 1998, they filed their own application with the department of environmental protection to develop the pond as a regional water supply source and to dredge the valuable sand and gravel deposits from the basin. The department of environmental protection rejected this application without prejudice in October, 1999, because neither the city nor Waterford, as potential users of the water, had agreed to endorse the plaintiffs’ application or join it.
In December, 1998, the department of environmental protection informed the city that its diversion application was incomplete, and instructed it to report on alternatives to the diversion of Hunts Brook, including obtaining water from the pond as well as from other nearby towns such as Groton and Norwich.
In January, 1999, the plaintiffs attended a public information meeting at Waterford town hall that was held in conjunction with the department of environmental protection permitting process. The day after that meet
On February 9,1999, Bowen wrote on the city’s behalf to the Southeast Water Utility Coordinating Committee. He advised the committee of the city’s immediate need for water from the pond, as well as the city’s and Waterford’s interests in purchasing the pond. Bowen mentioned assurances of future supply that the city had made to Montville, as well the defendants’ opposition to the existence of another water company, like the plaintiffs’ business, in the area.
Several days later, the city and Waterford executed a memorandum of understanding to develop new water sources (memorandum). The memorandum was negotiated through several secret meetings that were held at locations other than regular public facilities, including the dry-cleaning business of the chairman of the New London water authority. This memorandum, drafted in furtherance of the 1988 agreement, states that Waterford “and the [c]ity desire to act in a joint and coordinated manner to pursue the acquisition, development, and management of additional new water supply resources,” through either direct purchase or the use
Thereafter, in May, 2000, the plaintiffs met again with the New London water authority to discuss the city’s expressed intention to acquire the pond. The city again declined the plaintiffs’ offer to conduct business respecting the pond’s water, and Bowen again reiterated the city’s plan to use the power of eminent domain to take the pond if the plaintiffs did not abandon their water business and sell the pond to the city.
The plaintiffs also state that the city has manipulated market conditions by inflating the available safe yield of water. This market manipulation was done in accordance with the terms of the 1988 agreement that restricted Waterford’s ability to seek water source supplies beyond those provided by the city, particularly by conditioning that ability on the city’s unilateral declaration of a supply shortage. See footnote 6 of this opinion. Shortly after the execution of the 1988 agreement, the city increased its declared figure for safely available water by 30 percent, from 5.4 million gallons per day to 7 million gallons per day. Both the department of environmental protection and the department of public health have challenged the accuracy of this figure, and an independent department of environmental protection study conducted in April, 1991, calculated that only 5.1 million gallons per day were available as a safe yield. Engineering standards at that time would have justified the declaration of a supply emergency, thus opening up a supply market into which the plaintiffs could have
In August, 2000, the plaintiffs brought this action for damages and injunctive relief, claiming that the defendants’ conduct constituted: (1) restraint of trade in violation of General Statutes § 35-26;
The trial court, taking as undisputed the facts alleged in the pleadings; see footnote 5 of this opinion; concluded that the defendants were immune from antitrust liability because their activities constituted state action under § 35-31 (b). The trial court relied on this court’s decision in Mazzola v. Southern New England Telephone Co., 169 Conn. 344, 359, 363 A.2d 170 (1975),
On appeal, the plaintiffs claim that the trial court improperly granted the defendants’ motion for summary judgment because: (1) a genuine issue of material fact exists as the trial court failed to consider the existence of the relevant wholesale water market and conducted its analysis in the context of the irrelevant, heavily regulated, retail market; and (2) under Mazzola v. Southern New England Telephone Co., supra, 169 Conn. 344, the defendants are not entitled to state action immunity under § 35-31 (b) because their conduct was merely approved or acquiesced in by state regulatory agencies, and not “specifically directed or required” by state or federal statutes. The defendants contend otherwise, and they also claim that § 35-44b, as construed in Vacco v. Microsoft Corp., 260 Conn. 59, 793 A.2d 1048 (2002), now requires this court to apply the federal case law principles governing state action immunity that have emerged following Parker, which provide for immunity if the municipalities’ alleged anticompetitive conduct is a “ ‘foreseeable result’ ” of state legislation.
Before we turn to the parties’ specific claims, we set forth the proper standard of review. We will engage in plenary review of all issues raised in this appeal, particularly because the extent to which anticompetitive conduct is “ ‘specifically directed or required’ by the government is a mixed question of fact and law . . . .” (Citations omitted.) Westport Taxi Service, Inc. v. Westport Transit District, 235 Conn. 1, 26, 664 A. 2d 719 (1995); id., 25-26 (declining to review transit district’s § 35-31 [b] state action defense to antitrust action because it was not raised in trial court and record was
I
WHETHER § 35-44b INCORPORATES THE FEDERAL STATE ACTION DOCTRINE OF PARKER INTO THE ANTITRUST IMMUNITY PROVIDED BY § 35-31 (b)
We first must determine the correct legal standards to apply to the facts pleaded in the complaint, which entails an examination of the interplay, if any, between federal case law, beginning with Parker v. Brown, supra, 317 U.S. 341, governing state action immunity, and the statutory state action immunity standard set forth by § 35-31 (b). Indeed, the defendants argue in support of the application of the federal standards that have evolved from the Supreme Court’s seminal decision in Parker, as an alternate ground for affirming the trial court’s judgment.
Section 35-44b, the statute at issue, provides: “It is the intent of the General Assembly that in construing sections 35-24 to 35-46, inclusive, the courts of this state shall be guided by interpretations given by the federal courts to federal antitrust statutes.” We now turn to a review of the two potentially conflicting state and federal legal landscapes.
A
Federal Antitrust Immunity under Parker
In 1943, the United States Supreme Court decided Parker v. Brown, supra, 317 U.S. 341. In Parker, a pro
With respect to the application of state action immunity to municipalities, subsequent decisions of the Supreme Court have held that “Parker immunity does not apply directly to local governments . . . have recognized . . . that a municipality’s restriction of compe
State Action Immunity under § 35-31 (b)
Connecticut has, however, its own statutory version of state action immunity in the form of § 35-31 (b). Section 35-31 (b) provides: “Nothing contained in this chapter shall apply to those activities of any person when said activity is specifically directed or required by a statute of this state, or of the United States.” This statute was first explained by this court in Mazzola v. Southern New England Telephone Co., supra, 169 Conn. 353-54, wherein the plaintiff brought an action against the telephone company, claiming antitrust violations resulting from the telephone company’s practices with respect to answering machines and message-taking devices. Specifically, the plaintiff challenged the requirement that individuals obtaining such services from sources other than the telephone company were required to purchase or lease “protective link apparatus from the [telephone company] at a monthly charge fixed by the [telephone company].” Id., 353. In Mazzola, this court addressed the telephone company’s argument that § 35-31 (b) rendered it immune from antitrust liability because its activities had been approved by the public utilities commission in accordance with the rate-setting procedure prescribed by General Statutes § 16-19. Id., 357-58.
The court began the decision in Mazzola by reviewing the origins of the Connecticut antitrust act, noting that
The court then reviewed the public utility rate-setting process of § 16-19, and concluded that “[u]nder these circumstances, the role that is statutorily assigned to the [public utilities commission] in rendering effective tariffs proposed by companies such as the defendant amounts to little more than acquiescence in a program originated by the defendant. In no sense, then, can activities of the defendant such as the kind of activities challenged by the plaintiff, purportedly authorized by a tariff filed with and approved by the [public utilities commission], be characterized as ‘compelled by direction of the [s]tate acting as a sovereign’ under the Parker doctrine as it has been judicially interpreted. . . . Nor can such activities consequently be comprehended within the more stringent standards applicable to exemptions from antitrust liability established by [§35-31 (b)].” (Citation omitted; emphasis added.) Id., 365-66.
This court next mentioned § 35-31 (b) immunity in the 1995 decision in Westport Taxi Service, Inc. v. Westport Transit District, supra, 235 Conn. 23-27. Although this court concluded that the issue was not reviewable because it had not been properly raised as a special defense at trial, and the record was not plain error, the court nevertheless briefly discussed in dicta the proper standards for that inquiry. Id., 23-25. The court cited Mazzola, acknowledging that it had interpreted § 35-31 (b) as more stringent than the federal law, and stated that under the statute, “[i]n order to be shielded by qualified state action immunity, the defendant must show that its anti-competitive conduct was ‘specifically
C
Whether § 35-44b Requires Incorporation of the Federal Immunity Standards into a § 35-31 (b) Analysis
This court decided Westport Tax Service, Inc., in 1995, three years after the enactment of § 35-44b, which was cited therein in further support of the proposition that, because “[t]he legislative history of the act clearly establishes that it was intentionally patterned after the antitrust law of the federal government. . . . [0]ur construction of the Connecticut Anti-Trust Act is aided by reference to judicial opinions interpreting the federal antitrust statutes. . . . Accordingly, we follow federal precedent when we interpret the act unless the text of our antitrust statutes, or other pertinent state law, requires us to interpret it differently.” (Citations omitted; emphasis added; internal quotation marks omitted.) Id., 15-16; see also id., 15 n.17 (“[w]e note that in 1992, the legislature explicitly incorporated into law its intent that the judiciary be guided by interpretations of federal antitrust statutes when it enacted ... § 35-44b”). The text of § 35-44b provides: “It is the intent of the General Assembly that in construing sections 35-24 to 35-46, inclusive, the courts of this state shall be guided by interpretations given by the federal courts to federal antitrust statutes.”
This court explained § 35-44b in detail in Vacco v. Microsoft Corp., supra, 260 Conn. 60-61, wherein the plaintiff brought an action under the Connecticut Antitrust Act against the defendant, Microsoft Corporation. We concluded that the plaintiff, as an end user licensee of the operating system software manufactured by the defendant, could not maintain a state antitrust action
We conclude that § 35-44b does not require us to incorporate the federal case law defining state action immunity into our construction of § 35-31 (b). The applicability of § 35-44b to the facts and legal landscape of the present case is questionable, at best. First and foremost, state action immunity under the Connecticut Antitrust Act is based on a standard set forth in a specific statutory provision, namely, § 35-31 (b), while that same immunity under federal law has its origins in case law construing the more generalized provision of the Sherman Act, 15 U.S.C. § 1. See, e.g., Parker v. Brown, supra, 317 U.S. 348-49; Electrical Inspectors, Inc. v. East Hills, supra, 320 F.3d 118; see footnote 17 of this opinion for the text of the Sherman Act. Indeed, we have recognized that § 35-31 (b) “has no parallel in the federal antitrust statutes.”
II
WHETHER THE TRIAL COURT PROPERLY CONCLUDED THAT THE STATUTORY SCHEME “SPECIFICALLY DIRECTED OR REQUIRED” THE DEFENDANTS’ ACTIVITIES
Plaving concluded that § 35-31 (b), as explained by Mazzola v. Southern New England Telephone Co., supra, 169 Conn. 361, provides the governing standard to apply in the present case, we now consider whether the trial court applied it properly to the facts pleaded by the plaintiffs when viewed in light of the statutes and regulations governing the activities of municipal water companies. The plaintiffs claim that the defendants are not entitled to immunity under § 35-31 (b) because their conduct with respect to the wholesale water market was not “specifically directed or required” as: (1) they voluntarily subjected themselves to the comprehensive statutoiy and regulatory scheme governing water companies; (2) regulatory approval or acceptance of water supply contracts and plans by state agencies
A
Definition of the Relevant Market
We note at the outset that proper analysis in an antitrust case first requires determination of the “relevant market . . . .” AD/SAT v. Associated Press, 181 F.3d 216, 225 (2d Cir. 1999); id. (“[a]s is frequently the case in antitrust litigation, the [c]ourt’s definition of the relevant market was dispositive”); accord Westport Taxi Service, Inc. v. Westport Transit District, supra, 235 Conn. 16 (“[m]onopoly power is power to fix or control prices or to exclude or control competition in the relevant market” [internal quotation marks omitted]). “The relevant market for purposes of antitrust litigation is the ‘area of effective competition’ within which the defendant operates.” AD/SAT v. Associated Press, supra, 227. Market definition generally “is a deeply fact-intensive inquiry . . . .” Todd v. Exxon Corp., 275 F.3d 191, 199 (2d Cir. 2001); see also Hayden Publishing Co. v. Cox Broadcasting Corp., 730 F.2d 64, 70 (2d Cir. 1984) (“[i]n our view, there were clearly genuine issues of fact concerning the definition of the relevant market, thus precluding even partial summary judgment”).
The plaintiffs contend, both in their brief and at oral argument before this court, that the trial court improperly conducted its state action analysis in a manner that
Having reviewed the pleadings and factual record in this case in the context of the relevant statutes, we conclude that there is, at the very least, a genuine issue of material fact as to the existence of a wholesale water market in southeastern Connecticut.
B
The Statutory Scheme Relevant to the Defendants’ Activities
Municipalities and other entities in the water business, especially at the retail level, unquestionably are subject to a vast array of statutes and regulations. Nevertheless, the “mere pervasiveness of a regulatory scheme does not immunize an industry from antitrust liability for conduct that is voluntarily initiated.” MCI Communications Corp. v. American Telephone & Tele
Regulation of water companies begins at their inception. Water companies may not be formed without a special act of the General Assembly after investigation and a report by the department of environmental protection, the department of public health and the department of public utility control into, inter alia, the proposed company’s financial solvency, its water supply system adequacy and potability, and “the effect on water supplies of other systems . . . .” General Statutes § 2-20a; see also General Statutes § 7-234 (municipalities “may acquire, construct and operate a municipal water supply system where [1] there is no existing private waterworks system, [2] the owner or owners of a private waterworks system are willing to sell or transfer all or part of such system to the municipality, or [3] a public regional waterworks system within said town, city or borough or district is willing to sell or transfer all or part of the system to the municipality”).
The defendants point out correctly that the statutes and regulations do envision a significant degree of cooperation, and indeed, regional coordination of water companies. For example, water utility coordinating committees are required to “prepare a coordinated water system plan in the public water supply management area” that “shall promote cooperation among public water systems,” and to submit that plan to the department of public health. General Statutes § 25-33h (a).
The statutes also envision extensive planning in conjunction with that coordination. Under General Statutes § 25-32d (a),
Similar planning occurs on the level of the water utility coordinating committees, who are required to conduct preliminary assessments, in consultation with the department of environmental protection and the department of public health, of water supply conditions and problems in their areas. See General Statutes § 25-33g (a). As part of this process, the water utility coordinating committees “shall establish preliminary exclusive service area boundaries, based on the final assessment, for each public water system within the management area, and may change such boundaries. ... If there is no agreement by the committee on such boundaries, or on a change to such boundaries, the committee shall consult with the Department of Public Utility Control. If there is no agreement by the committee after such consultation, the Commissioner of Public Health shall establish or may change such exclusive service area boundaries taking into consideration any
Indeed, “[e]ach water utility coordinating committee shall prepare a coordinated water system plan in the public water supply management area. Such plan shall be submitted to the Commissioner of Public Health for his approval not more than two years after the first meeting of the committee. The plan shall promote cooperation among public water systems and include, but not be limited to, provisions for (1) integration of public water systems, consistent with the protection and enhancement of public health and well-being; (2) integration of water company plans; (3) exclusive service areas; (4) joint management or ownership of services; (5) satellite management services; (6) interconnections between public water systems; (7) integration of land use and water system plans; (8) minimum design standards; (9) water conservation; (10) the impact on other uses of water resources; and (11) acquisition of land surrounding wells proposed to be located in stratified drifts.”
C
Application of § 35-31 (b) to the Water Company and Supply Statutes
The defendants argue that these statutes and regulations “seek to promote the cooperation and intercon
We note, at the outset, that we need not determine whether a monopoly is the “reasonably foreseeable” result of this statutory scheme. That inquiry would have its basis in the broader state action standards found under federal case law following Parker, and is, therefore, incompatible with the narrower analysis demanded by § 35-31 (b). See part I A of this opinion. As discussed previously in part I C of this opinion, this court’s decision in Mazzola v. Southern New England Telephone Co., supra, 169 Conn. 344, remains the controlling construction of § 35-31 (b). Case law following Mazzola that applied § 35-31 (b) demonstrates that the Connecticut immunity statute, which requires that the challenged activities be “specifically directed or required by a statute,” demands a more exacting analysis. Put differently, the cases demonstrate that § 35-31 (b) immunity from antitrust liability will attach only if the statute under which protection is sought speaks directly to the challenged conduct. Generalized statements of policy or implications from the sheer pervasiveness of a regulatory scheme as a whole, therefore, simply do not have the requisite specificity under § 35-
Apart from this court’s leading decision in Mazzola, the case law applying § 35-31 (b) is entirely contained in state and federal trial court decisions.
In Professional Ambulance Service, Inc. v. Blackstone, 35 Conn. Sup. 136, 137, 400 A.2d 1031 (1978), the plaintiff was a private ambulance company who, along with two other private ambulance companies, previously had been dispatched by the East Hartford police department on a rotating basis to provide emergency medical services to the town. The defendant mayor of East Hartford subsequently notified the plaintiff that the state office of emergency medical services and the North Central Emergency Medical Services Council had
The trial court, Covello, J., relied on Mazzola, and concluded that, “the parties sought to be enjoined from alleged antitrust activities are not the officers of a private company regulated by a state agency, but are the officials of the state and municipal agencies themselves, pursuing emergency medical service functions directed by the statutes.” Id., 142. The court stated that the ambulance service regulations at issue were promulgated pursuant to the “totality of the mandate set out” in the emergency medical services statutes. Id., 143. It concluded that the mayor’s activities “represent the product of specifically directed state action,” namely, regulations restricting ambulance advertising and ambulance primary service areas.
In addressing the plaintiffs argument that the state antitrust counterclaims should be dismissed under § 35-31 (b), the court relied on Mazzola and Professional Ambulance Service, Inc
We conclude that the present case is readily distinguishable from Professional Ambulance Service, Inc., and Wheelabrator Environmental Systems, Inc., because, in those cases, the applicable statutes and regulations spoke directly to all of the challenged conduct. In Professional Ambulance Service, Inc., the applicable regulations gave the town no choice except to designate one emergency ambulance service provider, and the advertising ordinance was authorized by a regulation directly on point. Similarly, in Wheelabrator Environmental Systems, Inc., it was the very existence of the waste manager’s contract with the municipality that was the sole challenged conduct, which was plainly and specifically authorized by statute.
In contrast, the plaintiffs in the present case have alleged sufficient facts, viewed in the context of the
The judgment is reversed and the case is remanded to the trial court with direction to deny the defendants’ motion for summary judgment and for further proceedings according to law.
In this opinion BORDEN, PALMER and VERTE-FEUILLE, Js., concurred.
General Statutes § 35-31 (b) provides: “Nothing contained in this chapter shall apply to those activities of any person when said activity is specifically directed or required by a statute of this state, or of the United States.”
Saunders is a founding member of Miller’s Pond Company, LLC, and Schacht is a managing member of that company.
The plaintiffs appealed from the judgment of the trial court to the Appellate Court, and upon the unopposed motion of the defendants, we transferred the appeal to this court pursuant to General Statutes § 51-199 (c) and Practice Book § 65-2.
General Statutes § 35-44b provides: “It is the intent of the General Assembly that in construing sections 35-24 to 35-46, inclusive, the courts of this state shall be guided by interpretations given by the federal courts to federal antitrust statutes.”
For purposes of their motion for summary judgment, the defendants admitted all of the factual allegations in the plaintiffs’ complaint. The trial court, therefore, treated the defendants’ motion for summary judgment as the equivalent of a common-law motion for judgment on the pleadings. See, e.g., Sewer Commission v. Norton, 164 Conn. 2, 5, 316 A.2d 775 (1972) (stating that motion for judgment on pleadings “requires a situation where the parties are willing to admit the facts and place their entire case on the legal issues raised, waiving the right to replead if the legal issue is decided against them” [internal quotation marks omitted]). Accordingly, for purposes of this appeal, we accept as undisputed the facts pleaded in the complaint, and unless otherwise noted, quotations from the record originate from that pleading.
The 1988 agreement also provides that, in the event that the city determines that a water shortage exists, Waterford “shall” make available “a suitable additional source of water supply,” if possible. If there is no additional source available, the city may refuse to accept new applications for water service in both the city and Waterford until the supply reserves are replenished.
The plaintiffs note that during the negotiation of the 1990 agreement, Waterford refused to allow the Faria Corporation, a major industry in Mont-ville, to have access to water for fire protection purposes.
The New London water authority reiterated its refusal to deal with the plaintiffs at a meeting in May, 2000. The chairman of the water authority told the plaintiffs that “ ‘[w]e’re the only game in [Waterford], Forget going into the water business and forget the Connecticut Water Company.’ ”
These other sources are located outside the city and Waterford, and are not subject to the 1988 agreement and its deterrence clause.
General Statutes § 35-26 provides: “Every contract, combination, or conspiracy in restraint of any part of trade or commerce is unlawful.”
General Statutes § 35-27 provides: “Every contract, combination, or conspiracy to monopolize, or attempt to monopolize, or monopolization of any part of trade or commerce is unlawful.”
General Statutes § 35-28 provides: “Without limiting section 35-26, every contract, combination, or conspiracy is unlawful when the same are for the purpose, or have the effect, of: (a) Fixing, controlling, or maintaining prices, rates, quotations, or fees in any part of trade or commerce; (b) fixing, controlling, maintaining, limiting, or discontinuing the production, manufacture, mining, sale, or supply of any part of trade or commerce; (c) allocating or dividing customers or markets, either functional or geographical, in any part of trade or commerce; or (d) refusing to deal, or coercing, persuading, or inducing third parties to refuse to deal with another person.”
General Statutes § 35-29 provides: “Every lease, sale or contract for the furnishing of services or for the sale of commodities, or for the fixing of prices charged therefor, or for the giving or selling of a discount or rebate therefrom, on the condition or understanding that the lessee or purchaser shall not deal in the services or the commodities of a competitor or competitors of the lessor or seller, shall be unlawful where the effect of such lease
Under § 35-29, a “tying arrangement is an agreement by a party to sell one product but only on the condition that the buyer also purchase a different (tied) product, or at least agree that he will not purchase that product from any other supplier.” State v. Hossan-Maxwell, Inc., 181 Conn. 655, 659, 436 A.2d 284 (1980).
The trial court also relied on a pair of state and federal trial court decisions applying § 35-31 (b), both of which were authored by Judge Covello. See generally Wheelabrator Environmental Systems, Inc. v. Galante, United States District Court, Docket No. 3:97CV01040, 2000 WL 863029 (D. Conn. March 31, 2000); Professional Ambulance Service, Inc. v. Blackstone, 35 Conn. Sup. 136, 400 A.2d 1031 (1978).
General Statutes § 25-33c provides: “The General Assembly finds that an adequate supply of potable water for domestic, commercial and industrial use is vital to the health and well-being of the people of the state. Readily available water for use in public water systems is limited and should be developed with a minimum of loss and waste. In order to maximize efficient and effective development of the state’s public water supply systems and to promote public health, safety and welfare, the Department of Public Health shall administer a procedure to coordinate the planning of public water supply systems.”
The trial court, in discussing Parker v. Brown, supra, 317 U.S. 341, stated that it “is interesting to note that this doctrine has evolved through the years; under federal antitrust laws, the defendants’ activities would clearly be exempt from liability.” Accordingly, it is appropriate for us to consider the defendants’ proposed alternate ground for affirmance. See, e.g., New Haven v. Bonner, 272 Conn. 489, 497, 863 A.2d 680 (2005) (declining to consider alternate ground for affirmance that was not raised before trial court).
The Sherman Act provides in relevant part: “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is declared to be illegal. . . .” 15 U.S.C. § 1.
Indeed, we note that the defendants cite multiple cases wherein municipal water and sewer companies have been held immune from federal antitrust liability under the Parker doctrine. See, e.g., Hallie v. Eau Claire, supra, 471 U.S. 42 (Stating that “it is sufficient that the statutes authorized the [c]ity to provide sewage services and also to determine the areas to be served. We think it is clear that anticompetitive effects logically would result from this broad authority to regulate.”); McCollum v. Athens, 976 F.2d 649, 655 (11th Cir. 1992) (concluding that municipal waterworks is immune from antitrust liability in action brought by retail customers because statutes
General Statutes § 35-35 provides: “The state, or any person, including, but not limited to, a consumer, injured in its business or property by any violation of the provisions of this chapter shall recover treble damages, together with a reasonable attorney’s fee and costs.”
The relevant provision of the Clayton Act, 15 U.S.C. § 15, provides in relevant part: “(a) Amount of recovery; prejudgment interest
“Except as provided in subsection (b) of this section, any person who shall be injured in his business or property by reason of anything forbidden in the antitrust laws may sue therefor in any district court of the United States in the district in which the defendant resides or is found or has an agent, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the cost of suit, including a reasonable attorney’s fee. . . .”
In so concluding, we also noted the extensive legislative history behind the failure of numerous “Illinois Brick [Co. ] repealer bills,” which attempted to nullify at the state level the United States Supreme Court holding in Illinois Brick Co. v. Illinois, supra, 431 U.S. 735; Vacco v. Microsoft Corp., supra, 260 Conn. 77-82, 77 n.22; as well as the “the inferential value of failed attempts to amend existing laws with respect to the intent of the legislature to acquiesce in prevailing judicial interpretations of such laws.” (Internal quotation marks omitted.) Id., 79.
Discussed at oral argument before this court, another example of a federal-state antitrust distinction is Congress’ express prohibition on the recovery of damages from a municipality under the Clayton Act, an enactment that has no parallel in the state statutory scheme. See 15 U.S.C. § 35 (a) (“[n]o damages, interest on damages, costs, or attorney’s fees may be recovered under section 4, 4A, or 4C of the Clayton Act [15 U.S.C. §§ 15,
We note that the legislative history of § 35-44b indicates that the legislature’s purpose in enacting that statute was to “mirror what Connecticut has done with unfair trade practices. Under the Connecticut Unfair Trade Practices Act. . . Connecticut looks to Federal Unfair Trade Practices Act, jurisprudence. [Section 35-44b] would attempt to do the same thing with antitrust law. The goal being to have a single antitrust jurisprudence in the United States. This is vital if corporations are going to be able to make critical decisions about research and development projects, that they may undertake.
“[This is like] corporate ventures in general, where antitrust laws may pose an obstacle. This would allow them to look to a single case law jurisprudence, in order to know whether they’re in compliance with our laws or not. Currently, a corporation in Connecticut or elsewhere, may have to look to [fifty] different sets of jurisprudence. This would move towards a national jurisprudence, and I believe it will strongly enhance the international competitiveness of Connecticut, and of American manufacturing and research companies, wherever they may be.” 35 H.R. Proc., Pt. 7,1992 Sess., pp. 2386-87, remarks of Representative Thomas Moukawsher; see also Conn. Joint Standing Committee Hearings, Commerce and Exportation, Pt. 2,1992 Sess., p. 735, testimony of Joseph Brennan, vice president of legislative affairs for Connecticut Business and Industry Association (“The Connecticut Antitrust Act, however, is inconsistent in its language and its application to federal antitrust law. The possibility of multiple enforcement by agencies applying different standards can create serious problems for businesses engaged in interstate commerce.”).
A brief review of the legislation and case law of other states demonstrates that had the legislature desired the wholesale incorporation of federal
The concurring opinion concludes that “[bjecause § 35-31 (b) is more specific than § 35-44b, its terms should prevail in this case. Thus, there is no need to go beyond the plain and unambiguous language of the statute.” The concurrence further states that it “see[s] no need” for much of the analysis herein, including our “lengthy” explanation of how federal antitrust state action immunity relates to Connecticut’s antitrust state action immunity. We take this opportunity to express briefly our respectful disagreement with much of the concurrence’s analysis.
We first note that the concurring opinion, while professing to follow strictly § l-2z, in fact departs from the analysis directed by that statute by invoking the canon of statutory construction that provides, “ [w]here statutes contain specific and general references covering the same subject matter, the specific references prevail over the general.” Galvin v. Freedom of Information Commission, supra, 201 Conn. 456. If the statutes at issue were in fact as plain and unambiguous as the concurrence states, resort to this canon, which is itself a form of “extratextual evidence of the meaning of the statute”; General Statutes § l-2z; simply would be unnecessary. Moreover, while canons certainly do have their place in the construction of statutes, it strikes us as unwise to elevate them over all other forms of “extratextual evidence” because, for almost every maxim found in the “grab bag” of canons, an equal and opposite proposition may be found. We have stated: “Although the so-called canons of statutory construction may at times serve as useful tools in deciphering legislative meaning, to rely on any one of them as a compelling factor in the interpretive process is problematic, because as Professor Karl Llewellyn persuasively has demonstrated, ‘there are two opposing canons on almost every point.’ K. Llewellyn, ‘Remarles on the Theory of Appellate Decision and the Rules or Canons About How Statutes Are to Be Construed,’ 3 Vand. L. Rev. 395, 401 (1950). The so-called ‘canons’ are not that, at least in the sense that any one of them reliably can be determined to apply or not to apply in any given case. They are, instead, merely guides drawn from experience, to be employed or not to be employed carefully and judiciously, depending on the circumstances. See F. Frankfurter, ‘Some Reflections on the Reading of Statutes,’ 47 Colum. L. Rev. 527, 544-45 (1947); see also United Illuminating Co. v. New Haven, 240 Conn. 422, 455, 692 A.2d 742 (1997). ‘To permit them to displace the conclusions that careful inteipretation yields . . . would be a disservice to the legislative process, as well as to the judicial exercise of interpreting legislative language based upon the premise that the legislature intends to enact reasonable public policies.’ United Illuminating Co. v. New Haven, supra, 455.” Burke v. Fleet National Bank, 252 Conn. 1, 23-24, 742 A.2d 293 (1999).
We also disagree with the analysis contained in footnote 3 of the concurring opinion, namely, that “[fjederal antitrust law pertaining to state action immunity is more lenient than § 35-31 (b), but is just as specific. The reason
We also note that adoption of the federal standard would diminish the strict construction that we give to the exceptions under § 35-31, including § 35-31 (b). Cheryl Terry Enterprises, Ltd. v. Hartford, 270 Conn. 619, 628, 854 A.2d 1066 (2004), citing Mazzola v. Southern New England Telephone Co., supra, 169 Conn. 355.
We note that further explication on this point by the trial court would have greatly aided our review of the market definition issue, and that the better practice would have been for the plaintiffs, who as the appellants bear responsibility for providing an adequate record for review, to move for an articulation pursuant to Practice Book § 66-5. Nevertheless, the plaintiffs’ claim remains reviewable because: (1) the underlying facts are undisputed in light of the trial court’s decision to treat the defendants’ summary judgment motion as one of judgment on the pleadings; see footnote 5 of this opinion; (2) whether the trial court properly granted a motion for summary judgment is a question of law subject to de novo review; and (3) the relevant documents are part of the record on appeal. See Ammirata, v. Zoning Board of Appeals, 264 Conn. 737, 744-45, 745 n.10, 826 A.2d 170 (2003) (res judicata and collateral estoppel claims); Niehaus v. Cowles Business Media, Inc., 263 Conn. 178, 185, 819 A.2d 765 (2003) (whether agreement was clear and unambiguous).
We note that the applicable department of public health regulations also contemplate a wholesale market, as the definition of “ ‘[available water’ ” includes water supplied by contract, as well as that obtained through “active sources . . . .” Regs., Conn. State Agencies § 25-32d-la (4). To be “available,” however, the contract must not be “subject to cancellation or suspension . . . .’’Id.
We have reviewed the myriad of statutes and regulations cited by the defendants in the synopsis contained in their appendix, as well as those actually discussed in their brief. We do not, however, discuss all of them in this opinion because many are, despite their pervasive verbosity, nevertheless tangential or irrelevant to the issues discussed herein.
We note that both the plaintiffs and the defendants engage in extensive discussions of the special act through which the General Assembly established the Southeastern Connecticut Water Authority in 1967. See Special
We note that the trial court’s decision in the present case cited and quoted only § 25-33c in discussing the statutory and regulatory scheme, but acknowledged that the defendants provided it with a comprehensive synopsis of the entire scheme.
Accordingly, the legislature also gives the department of public health jurisdiction over “ail matters concerning the purity and adequacy of any water supply source used by any municipality, public institution or water company for obtaining water, the safety of any distributing plant and system for public health purposes, the adequacy of methods used to assure water purity, and such other matters relating to the construction and operation of such distributing plant and system as may affect public health.” General Statutes § 25-32 (a).
By way of illustration, the defendants cite several examples of the department of public health’s extensive jurisdiction over water companies and their properties, such as the requirement of a written permit for the transfer, lease, assignment or change in the use of watershed lands. See General
Indeed, a water company desiring to sell even a potential or abandoned source of water must notify the department of public health, which shall order that company to notify “other water companies that may reasonably be expected to utilize the source, potential source or abandoned source of its intention and the price at which it intends to sell such source. . . .” General Statutes § 25-331 (a). That statute also prescribes a procedure for other water companies to buy that source, and empowers the department of public health to determine who may buy the source if it is desired by multiple water companies. General Statutes § 25-33I (b).
General Statutes § 25-33h (a) provides: “Each water utility coordinating committee shall prepare a coordinated water system plan in the public water supply management area. Such plan shall be submitted to the Commissioner of Public Health for his approval not more than two years after the first
General Statutes § 25-32d (e) directs notice and the content thereof to municipalities when water companies submit a plan or revised plan that “involves a forecast of land sales, abandonment of any water supply source, sale of any lands, or land reclassification . . . .”
General Statutes § 25-32d (d) requires the department of public health to adopt implementing regulations, “in consultation with” the department of environmental protection and the public utilities control authority, and that “[s]uch regulations shall include a method for calculating safe yield, the contents of emergency contingency plans and water conservation plans, the contents of an evaluation of source water protection measures, a process for approval, modification or rejection of plans submitted pursuant to this section, a schedule for submission of the plans and a mechanism for determining the completeness of the plan. ...”
Agency regulations implementing § 25-32d prescribe a process for the submission, completion and approval of the plan. Section 25-32d-5 (c) (1) of the Regulations of Connecticut State Agencies provides a timeline for the process by which the department of public health consults with the department of environmental protection and the department of public utility control. Section 25-32d-5 (c) (3) of the Regulations of Connecticut State Agencies requires the commissioner to approve, reject, or approve the plan “with conditions” within sixty days of department of environmental protection or department of public utility control comment, or if there has been no such comment, “in no case more than one hundred and fifty days after written notice that the plan has been deemed complete . . . .”
Section 25-32d-5 (c) (2) of the Regulations of Connecticut State Agencies provides factors for the department of public health to consider “in making a decision to approve, modify or reject a plan,” including “(A) the ability of the company to provide a pure, adequate and reliable water supply for present and projected future customers;
“(B) adequate provision for the protection of the quality of future and existing sources;
“(C) comments from state agencies; and
“(D) consistency with state regulations and statutes.”
General Statutes § 25-33h (b) prescribes a procedure for the adoption of the plan, and requires that the committee seek comments from, inter alia, the department of public health, on “the availability of pure and adequate water supplies, potential conflicts over the use of such supplies, and consistency with the goals of sections 25-33c to 25-33j, inclusive.”
Section 25-33h-l (d) of the Regulations of Connecticut State Agencies prescribes the contents of the coordinated water supply plans promulgated pursuant to General Statutes § 25-33h. It requires that “[t]he coordinated water system plan shall include, but not be limited to, the following:
“(1) The individual water system plan of each public water system within a public water supply management area, required to file such plan pursuant to section 25-32d of the Connecticut General Statutes; and
“(A) Water Supply Assessment
“A water supply assessment shall be developed to evaluate water supply conditions and problems within the public water supply management area. The [water utility coordinating committee] shall prepare a preliminary and then a final water supply assessment. The water supply assessment shall be a factual and concise report including at least the following topics as they relate to public water systems in the public water supply management area:
“(i) Description of existing water systems, including
“(aa) History of water quality, reliability, service, and supply adequacy;
“(bb) General fire fighting capability of the utilities; and
“(cc) Identification of major facilities which need to be expanded, altered, or replaced.
“(ii) Availability and adequacy of any future water source(s).
“(iii) Existing service area boundaries and public water system limits established by statute, special act or administrative decision, including a map of established boundaries, and identification of systems without boundaries.
“(iv) Present and projected growth rates, including population data, land use patterns and trends, and identification of lands available for development.
“(v) Status of water system planning, land use planning and coordination between public water systems. . . .” Regs., Conn. State Agencies § 25-33h-1(d).
The defendants rely heavily on the phrase “totality of the mandate,” as coined by Judge Covello in Professional Ambulance Service, Inc. v. Blackstone, 35 Conn. Sup. 136, 143, 400 A.2d 1031 (1978), in support of their argument that the water supply statutes, in sum, “specifically commanded or directed” their conduct. We emphasize, however, that § 35-31 (b) immunity requires a statute that addresses the challenged conduct directly and explicitly, and accordingly, is not triggered by implication alone.
Trial court opinions are, “although entitled to serious consideration . . . not binding authority in this court. ” Commission on Hospitals & Health Care v. Lakoff, 214 Conn. 321, 333, 572 A.2d 316 (1990). Nevertheless, the trial court cases discussed herein provide particularly cogent illustrations of the correct application of § 35-31 (b), and their inclusion is warranted because that issue has been addressed only once on the appellate level, by this court’s decision in Mazzola.
The trial court in Professional Ambulance Service, Inc. v. Blackstone, supra, 35 Conn. Sup. 138-39, stated that the mayor’s actions were “the product of the implementation of a series of state regulations promulgated by the Connecticut department of health in furtherance of the emergency medical services program authorized by General Statutes [§] 19-73u et seq.
“Among their other duties, those councils are required by state regulation to designate so-called ‘Primary Service Areas’ for the various communities within their region. A primary service area ... is simply a defined or known geographic area. [Sections] 19-73w-404 (B) and 19-73w-400 (D) [of the Regulations of Connecticut State Agencies] both require that within each primary service area there shall be only one firm assigned for a given category of service.”
The court also noted § 19-73w-307 of the Regulations of Connecticut State Agencies, which provided: “ ‘Ambulance services shall not advertise emergency medical services or emergency personnel for any political subdivision which has designated a phone number to be used to obtain EMS [Emergency Medical Service], . . .’” Professional Ambulance Service, Inc. v. Blackstone, supra, 35 Conn. Sup. 140 n.5.
The court dismissed the Sherman Act counterclaims after conducting a separate analysis pursuant to Parker v. Brown, supra, 317 U.S. 341, and its progeny. Wheelabrator Environmental Systems, Inc. v. Galante, supra, 2000 WL 863029, *8.
General Statutes § 7-273bb (b) gives powers to municipal and regional resource recovery authorities and provides: “It is the intention of this chapter that the authorities shall be granted all powers necessary to fulfill the purposes of this chapter and to carry out their assigned responsibilities and that the provisions of this chapter are to be construed liberally in furtherance of this intention.” See also General Statutes § 7-273bb (a) (12) (recovery authority may “do all things necessary for the performance of its duties, the fulfillment of its obligations, the conduct of its operations, the maintenance of its working relationships with the state, other municipalities, regions and persons, and the conduct of a comprehensive program for solid waste disposal and resources recovery, and for solid waste management services, in accordance with the provisions of the state or local solid waste management plan, applicable statutes and regulations and the requirements of this chapter”).
In contrast, we not e Interstate Aviation, Inc. v. Meriden, Superior Court, judicial district of New Haven at Meriden, Docket No. CV92-0240874S (May 26, 1995), wherein the plaintiff unsuccessfully bid on the opportunity to operate a municipal airport. The plaintiff brought an action against the city and the successful bidder, claiming violations of municipal competitive bidding laws and antitrust statutes. With respect to the antitrust claims, the city claimed immunity pursuant to § 35-31 (b), and moved for summary judgment. The trial court denied the motion for summary judgment, relying onMazzola and concluding that the statute, General Statutes § 13b-43, provided only that" [a]ny municipality . . . may establish, maintain and operate an airport at any location within the state approved by the commissioner and by the municipality or municipalities within which such airport, is to be established, and may take any land or interest therein necessary for such establishment at such location upon paying just compensation to the owner of such land or interest therein. . . .” The court stated that the “use of the term ‘may’ does not support the notion that such action is specifically directed or required by statute,” and also that because the enabling legislation provided for acquisition of competitors, but only “in exchange for payment, it ‘very clearly negates any defense claim of entitlement to impunity or immunity.’ ” Interstate Aviation, Inc. v. Meriden, supra.
Concurring Opinion
concurring. I agree with the result reached by the majority, but disagree with its method
The defendants argue, in effect, that the plain and unambiguous language of both statutes cannot be given effect and, therefore, federal state action immunity standards should be read into § 35-31 (b), contrary to the plain language of that statute. The apparent inconsistency between these statutes can be reconciled, however, by application of the principle that “[w]here statutes contain specific and general references covering the same subject matter, the specific references prevail over the general.”
General Statutes § 35-31 (b) provides: “Nothing contained in this chapter shall apply to those activities of any person when said activity is specifically directed or required by a statute of this state, or of the United States.”
General Statutes § 35-44b provides: “It is the intent of the General Assembly that in construing sections 35-24 to 35-46, inclusive, the courts of this state shall be guided by interpretations given by the federal courts to federal antitrust statutes.”
The majority applies this principle to conclude that § 35-31 (b) should apply over the more general provisions of the Sherman Act, 15 U.S.C. § 1, as construed by the federal courts. I disagree. Federal antitrust law pertaining to state action immunity is more lenient than § 35-31 (b), but is just as specific. The reason that we should not follow federal law in this case is
The majority argues that my analysis is internally inconsistent because the canon of statutory construction providing that specific statutes prevail over more general statutes is, itself, a form of “ ‘extratextual evidence ....’” See footnote 25 of the majority opinion. I disagree. I believe that “we may apply the ordinary canons of judicial construction in seeking the plain meaning” of the statutory scheme. (Emphasis added.) State v. Courchesne, 262 Conn. 537, 634, 816 A.2d 562 (2003) (Zaretta, J., dissenting, joined by Sullivan, C. J.). Thus, this canon informs us, before we ever look to federal law, that if there is an inconsistency between federal law and § 35-31 (b), § 35-31 (b) prevails over § 35-44b.
Finally, the majority argues that the canon providing that the specific prevails over the general does not apply because § 35-31 (b) and § 35-44b are fundamentally different. At the heart of the majority’s analysis, however, is its recognition that the general rule that we follow federal precedent when interpreting the Connecticut Antitrust Act does not apply when the specific text of our antitrust statutes requires us to do otherwise. See Westport Taxi Service, Inc. v. Westport Transit District, 235 Conn. 1, 15-16, 664 A.2d 719 (1995). This is an application of the very canon that the majority purports to reject. Thus, my disagreement with the majority is not with its general approach to the issue or its conclusion, but with its apparent unwillingness to state simply and explicitly that, because the language of § 35-31 (b) is plain and unambiguous, we are bound by that language and, because § 35-31 (b) is more specific than § 35-44b, we are not bound by § 35-44b.
Reference
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- Miller’s Pond Company, LLC, Et Al. v. City of New London Et Al.
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