U.S. Supreme Court Limits State Action Immunity, with Assistance from the AAI

Feb 20 2013

FTC v. Phoebe Putney Health System, Inc., No. 11-1160 (U.S. Feb. 19, 2013).

In FTC v. Phoebe Putney Health System, Inc., a unanimous Supreme Court reversed the Eleventh Circuit and rejected the lower court's permissive test for the level of foreseeability necessary to determine that a legislature has clearly articulated and affirmatively expressed a state policy to displace competition, thereby triggering immunity from the federal antitrust laws under the state action doctrine. In concluding that a state legislature's grant of general corporate powers to a state hospital authority did not foreseeably lead to the anticompetitive use of those powers, the Court explained that the Eleventh Circuit had "applied the concept of 'foreseeability' from our clear-articulation test too loosely. . . . [W]e have concluded that a state policy to displace federal antitrust law was sufficiently expressed where the displacement of competition was the inherent, logical, or ordinary result of the exercise of authority delegated by the state legislature. In that scenario, the State must have foreseen and implicitly endorsed the anticompetitive effects as consistent with its policy goals." Slip op. at 11. Consistent with the AAI brief, the Court explained that although "both private parties and local governmental entities conceivably may transgress antitrust requirements by exercising their general powers in anticompetitive ways . . . , a reasonable legislature's [mere] ability to anticipate that (potentially undesirable) possibility falls well short of clearly articulating an affirmative state policy to displace competition with a regulatory alternative." Id. at 13.

The AAI's amicus brief was written by former AAI Director of Legal Advocacy Rick Brunell, with assistance from AAI Advisory Board Members Tim Greaney, Barak Richman, Chris Sagers, Ted Frech, and Peter Carstensen and Matt Cantor (Constantine Cannon).