Legal Alerts Sep 04, 2018

12 Orange County Cities Prevail in Federal Antitrust Lawsuits Over Ambulance Services

Ninth Circuit Affirms Lower Court’s Dismissals

12 Orange County Cities Prevail in Federal Antitrust Lawsuits Over Ambulance Services

The Ninth Circuit U.S. Court of Appeals upheld a lower court decision to dismiss 12 Orange County cities from federal antitrust lawsuits alleging the municipalities monopolized ambulance services in their boundaries.
 
Ambulance provider AmeriCare MedService, Inc. filed 12 separate federal antitrust lawsuits alleging that each city was not in compliance with section 1797.201 of California’s Emergency Medical Services Act. Section 201 authorizes cities to continue to provide ambulance and emergency medical services based on service levels provided as of June 1, 1980. AmeriCare claimed the alleged non-compliance with section 201 meant each city was monopolizing ambulance services in violation of the federal Sherman Act. The company sought injunctive relief, treble damages (that is, $3 of damages for every dollar of damage proved) and attorney fees for not granting AmeriCare’s request to be placed on ambulance provider status.
 
In 2017, the U.S. District Court for the Central District of California dismissed each lawsuit, finding that each city was protected by the state-action doctrine. This doctrine provides that local governmental entities are immune from federal antitrust liability if they are acting within the scope of a “clearly articulated and affirmatively expressed” state policy to displace competition.
 
AmeriCare appealed the dismissals to the Ninth Circuit. On Aug. 27, the Ninth Circuit affirmed the dismissals in a memorandum decision. The decision is unpublished but, under federal rules, may be cited in federal court as persuasive authority. The decision found the cities were immune under the state-action doctrine. It observed that “California law [under section 201] specifically authorizes cities ‘to maintain control of the [emergency medical] services they operated or contracted for in June, 1980’” and “make decisions as to the appropriate manner of providing those services.” It further noted: “since many cities had entered into exclusive agreements prior to 1980, an ‘anticompetitive effect was the ‘foreseeable result.’’” The Ninth Circuit held that each city was therefore shielded from federal antitrust liability. Because the cities were immune, the Ninth Circuit found co-defendant CARE Ambulance Services, Inc., which had contracts with several of the cities, was also immune.
 
The 12 cities are: Anaheim, Buena Park, Costa Mesa, Fountain Valley, Fullerton, Garden Grove, Huntington Beach, Laguna Beach, La Habra, Newport Beach, Orange and San Clemente.
 
Best Best & Krieger LLP represented Costa Mesa, Fullerton, La Habra and San Clemente. Partner Kendall MacVey was designated by all 12 cities to handle oral argument both for the motion to dismiss before the trial court and before the Ninth Circuit. He and Of Counsel Wendy Wang authored the cities’ appellate brief.
 
The California Attorney General, as counsel for the Emergency Medical Services Authority, filed an amicus brief in support of AmeriCare. The California Fire Chiefs Association, the International Association of Firefighters,  the League of California Cities and the International Municipal Lawyers Association filed amici briefs in support of the cities. The case is AmeriCare Medservices, Inc. v. City of Anaheim, et al, Case No. 17-55565.
 
If you have any questions about this decision, please contact the author of this Legal Alert listed to the right in the firm’s Municipal Law practice group, or your BB&K attorney.
 
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